Across the EY organization, there are systems and structures in place to help analyze audit quality and improve working practices, skill sets and resource levels where necessary.
Professional Practice
The EY Professional Practice group has a central role in developing, monitoring and enhancing the quality of Assurance practices. It delivers practical insight and thought leadership on accounting, auditing, financial reporting, regulatory matters and other technical and risk matters to audit teams, the entities they audit and other stakeholders.
In addition, Professional Practice monitors audit quality and risks through internal inspections processes, including Audit Quality Reviews (AQRs).
Root cause analysis
Around 15,000 professional hours are devoted globally to root cause analysis each year. It is a central part of the EY quality improvement framework, providing in-depth assessment of the root causes that underlie an audit’s positive or negative inspection outcome.
The organization then investigates the findings in detail and undertakes correlation analysis. Combining all this research enables a better understanding of the drivers behind inspection outcomes, making it possible to take remedial action where necessary. This has allowed EY teams to focus on key behaviors that drive positive and high-quality results.
Root cause analysis
15,000approximate number of professional hours EY devotes globally to root cause analysis each year.
Milestones
Underscoring the EY Digital Audit is a keen focus on project management, powered by Milestones in EY Canvas. Milestones breaks the audit cycle down into specific tasks, with dates and steps designed to help achieve timely completion and appropriate supervision and review.
Milestones allows for better on-the-job coaching, while minimizing the time taken between work being completed and reviewed. This, in turn, allows teams to be more proactive and forward-thinking, and to better focus on year-end issues.
Coaching
EY teams are supported by a variety of coaching programs to help them with the more challenging areas of the audit. Coaching is provided through Key Findings Reviews (KFRs), the AQR program and other initiatives.
Through internal KFRs, the EY quality network collects and analyzes data and performance metrics from audits. KFRs are focused on areas of high findings from internal and external inspection activity. Ultimately, the objective is to build a continuous loop of improvement.
EY teams are supported by a variety of coaching programs to help them with the more challenging areas of the audit.
Audit quality indicators
The EY organization has developed audit quality indicators (AQIs) that help give insight on where it may be necessary to intervene if quality appears to be short of expectations. Examples of these indicators include:
- External inspection results
- Internal inspection results
- Milestone performance
- People surveys
- Staff retention rates
ISQM 1
In February 2019, the International Auditing and Assurance Standards Board released an exposure draft that proposes significant changes to the way professional accountancy firms manage quality. The International Standard on Quality Management 1 (ISQM 1) will replace the current International Standard on Quality Control 1, and take a more proactive and risk-based approach.
ISQM 1 is expected to require firms to design, implement, monitor and assess the overall system of quality management (SQM) that provides reasonable assurance a firm will meet its quality objectives. The proposed standard includes more robust requirements for the governance, leadership and culture of an audit firm and a risk assessment process that evaluates risks to achieving quality objectives and identification of controls that address those risks. It will involve more extensive monitoring of the SQM to evaluate effectiveness and to identify deficiencies that require corrective actions.
While the anticipated effective date of the standard is December 2021, EY teams have already taken many steps to improve the SQM and apply it consistently across the entire network of member firms.
Summary
Jay Paulson, EY Global Quality Enablement Leader, lists some of the ways in which EY teams are being helped to manage their responsibility to provide a high-quality audit. These include efforts to support them through coaching, root cause analysis and the Milestones project management program. He also outlines how the organization is improving the system of quality management, and applying it consistently worldwide, in anticipation of the forthcoming International Standard on Quality Management 1.
