Welcome to EY’s 2017 UK Transparency Report
The EY 2017 UK Transparency Report, volumes one and two, can be accessed on this page of our website. Also included are highlights and related messages in a series of interviews to help draw your attention to some of the important matters covered in this year’s report. All of this material is published to provide a timely and relevant source of information about EY in general, and our audit business in particular.
The disclosures are extensive. For example, they explain our outlook and how we are structured and governed, including the role of our Independent Non-Executives and how we apply the requirements of the UK’s Audit Firm Governance Code. We refer to the quality of our audits and our commitment to recruiting, developing and diversifying our people and talent pool. We also explain how we manage our risks and remain innovative and technologically advanced in what we do and how we do it.
It has been a UK regulatory requirement since 31 March 2010 for auditors of certain public interest entities to publish one of these reports annually. The legal requirement was implemented in the UK by the Financial Reporting Council in accordance with the EU’s Statutory Audit Directive 2006, and rules mandated by EU Regulation 537/2014.
The combination of these regulatory requirements, and our genuine desire to be transparent, makes our 2017 UK Transparency Report a useful source of information. So for example, whether you are a company looking to switch auditor. An inquisitive investor. A professional looking for their next move. Or perhaps a young person keen to make sure their first move really counts – read on!
Steve Varley, EY UK Chairman and UK&I Managing Partner
The past 12 months have been defined by political and economic change and, as you will read in our 2017 Transparency Report, EY UK has continued to be at the side of our clients to help them navigate the ever-changing globalised world. We make a positive impact for our clients and other stakeholders by ensuring our focus on building a better working world is constant.
Steve explains that EY’s success over the last year is the result of a long-term global strategy, and to future-proof the business the firm has invested in new technologies and people. He says that clients want more innovative products and services in order to adapt to domestic and global economic trends, and it’s important that EY responds to this. He also refers to EY’s purpose – to build a better working world – and explains that this involves an increase in trust and confidence in business.
David Thorburn, Independent Non-Executive
As EY UK’s INEs, we take our public interest responsibilities very seriously and are committed to playing our part in improving confidence in the firm through promoting audit quality, maintaining EY’s reputation across all its service lines and minimising the risk of firm failure.
David refers to the culture of EY and the tone from the top, and says that these are the first aspects of the firm the INEs look at. From there the INEs consider the firm’s processes and procedures, and they look at examples of these activities to make sure they work as intended. He adds that apart from chairing the UK firm’s Independent Oversight Committee, he is also a member of the EY Global Governance Council and Chairman of its Public Interest Sub-Committee. While undertaking these roles he has also spent time engaging with UK regulators and investors, and for the year ahead David says that the INEs’ priority is embedding their framework and structure to help protect the firm.
Hywel Ball, UK&I Managing Partner, Assurance, and UK Head of Audit
In its role as a global leader for the profession, EY must be agile and adaptive, while also maintaining the assurance and stability that lies at our core. This year, EY UK has demonstrated that we have been able to respond to fast-changing market dynamics. We will continue to seize the opportunities offered up by this rapidly changing world, both for our business and our clients.
Hywel says that the biggest challenge facing the audit profession is how it deals with advances in technology and the explosion in data. He adds that we have to consider how we use this data to improve further the assurance provided in our audit opinions. In terms of issues, Hywel talks about the profession needing to understand what part it should play in helping business to regain the trust of society. He adds that this lack of trust is accentuated by short termism – a disconnect between markets driven by short-term metrics, and people and companies looking to invest for the long-term.
Lisa Cameron, General Counsel, Managing Partner Risk Management UK&I
The EY UK Board has overall responsibility for risk management and internal control over the entire business of EY UK. In discharging this responsibility, the EY UK Board periodically, and at least annually, conducts a review of the effectiveness of the firm’s system of internal control. The UK management team is responsible for implementing and maintaining the necessary control systems.
Lisa talks about risk management also being the responsibility of everyone in the firm, and that the firm seeks to prevent financial loss, regulatory action and reputational damage in everything it does. She adds that a Risk Oversight Committee was formed which oversees the most significant risks in the firm: operational, strategic and external. These risks are owned by different parts of the firm and the owners are required to put controls in place so these risks can be mitigated.
Andrew Walton, UK&I Assurance Markets Leader, shares his views on how the audit market has changed
Christabel Cowling, Chief Operating Officer of the Assurance Business in the UK, and Audit Partner, talks about EY’s investment in its people
Eamonn McGrath, UK Head of Regulatory & Public Policy, and Audit Partner, outlines EY’s engagement with UK regulators and policy makers.
Loree Gourley, Director, UK Regulatory & Public Policy, explains how EY engages with investors
David Thorburn, INE, was appointed on 1 June 2016 and a member of the IOC since April 2017.
David is an External Member of the Bank of England’s Prudential Regulatory Committee and chairs the Chartered Banker Institute 2025 Foundation.
David is a Chartered Banker and former CEO of Clydesdale and Yorkshire Banks. He is also a former Chairman of CBI Scotland, the Scottish Financial Services Skills Gateway and the Advisory Board at Strathclyde Graduate School of Business.
David is a Past President of The Chartered Institute of Bankers in Scotland, and former Board Director of the British Bankers Association and Scottish Financial Enterprise. He was a founder member of the Professional Standards Board of the Chartered Banker Institute.
David’s competencies include accounting, based on his practical experience during his 37 years in banking, where he served latterly as CEO of Clydesdale Bank PLC and attended the Board Risk & Audit Committees, together with his current role at the Bank of England.
Rosemary Martin, INE, appointed on 1 November 2016 and a member of the IOC since April 2017.
In addition to her role as Group Counsel and Company Secretary to Vodafone, Rosemary is also an advisory board member of the Oxford Internet Institute and has a seat on the Listing Authority Advisory Panel of the FCA, which is a non-statutory panel advising the FCA on policy and regulation.
Rosemary previously served as CEO of the Practical Law Group, having spent 11 years with Reuters Group Plc in various roles, including Group General Counsel and Company Secretary. Before joining Reuters she was a partner with Mayer, Brown, and Rowe & Maw.
Rosemary was a non-executive director of HSBC Bank Plc (the European arm of HSBC Group) until 2016 and a member of the Corporate Governance Advisory Committee of the ICAEW for a five-year term.
Sir Peter Westmacott, INE, appointed on 1 April 2017 and a member of the IOC since April 2017.
Sir Peter was British Ambassador to the United States from January 2012 until he retired from the UK Diplomatic Service in January 2016. He spent a semester at Harvard’s Kennedy School of Government as a Resident Fellow.
Sir Peter was British Ambassador to France from 2007-2012 and to Turkey from 2002-2006. His 40-year diplomatic career included four years in Iran before the 1979 revolution and a secondment to the European Commission in Brussels. He was the Foreign and Commonwealth Office’s Director for the Americas from 1997-2000 and Deputy Under Secretary of State from 2000-2001. From 1990-1993, he was Deputy Private Secretary to His Royal Highness The Prince of Wales. He is a Distinguished Ambassadorial Fellow at the Atlantic Council, Deputy Chairman of Tellus Matrix LLP and an Advisory Director of Campbell Lutyens & Co.