5 minute read 10 Oct 2019
Enablement and quality support - Conceptual illustration

How EY supports audit teams to improve audit quality

By

Jay Paulson

EY Global Director of Quality Enablement

Experienced audit leader working closely with assurance professionals all over the world. Passionate about our commitment to high quality.

5 minute read 10 Oct 2019

A system of reviews and structures provides enablement and quality support and helps improve working practices, skills and resourcing.

High-quality audits help to create trust and confidence in the capital markets. The role of auditors is vital in giving shareholders, regulators and the wider community that confidence.

The EY organization aims to bring a passionate commitment to that role, and to audit quality, at all times. From the top down, EY people hold themselves and each other accountable; demonstrate what needs to be done to execute a high-quality audit; understand applicable professional standards; plan the work and are vigilant in assessing progress during the audit; appropriately document the work; and, critically, provide the necessary coaching, supervision and review.

Enablement and quality support is one of the six pillars of the Sustainable Audit Quality (SAQ) program. SAQ relies on the determination to embed critical thinking in EY teams at all stages of the audit process and prioritizes understanding where we are excelling and where there is a need to focus resources. 

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. To deliver high quality, it is important to support audit teams, who often work in stressful and demanding environments. It is equally crucial to monitor audit quality and engage in open discussions when challenges arise.

Quality Enablement Leaders

The EY Quality Enablement Leaders (QEL) network is a group of approximately 200 senior Assurance leaders who drive audit quality by providing hands-on support to audit teams. Their responsibilities include: coaching teams; supporting internal and external inspections; evaluating significant audit deficiencies through root cause analysis; looking at resourcing needs for changes in engagement dynamics; and helping provide additional support to audit teams due to changes in demands on engagements.

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

15,000

approximate 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.

About this article

By

Jay Paulson

EY Global Director of Quality Enablement

Experienced audit leader working closely with assurance professionals all over the world. Passionate about our commitment to high quality.