Posts Tagged “Big 4”

Today, Audit International are hoping to clear up a few of the most common Internal audit myths. Let us know if there are any we have overlooked, and we bet we can debunk those ones too.

Myth: There is little creativity in internal auditing
This couldn’t be further from the truth. Internal auditors are called on to do a hard job, that much is true. That job can be operationally challenging, “dry” in content (which is subjective), and seemingly “behind the scenes”. However, as Workiva states, IAs are increasingly using brand power and social media to better communicate what they do and its centrality to business operations.
• “For instance, a team I used to work on rebranded from “Internal Audit” to “Risk Advisory and Assurance.” It helped answer questions about what we do and provided clarity to the types of services we provided”.
If internal audits are seen to be working in the shadows, the time is now to dispel those rumours of bean-counting and step into the fore!

Myth: IAs are the business police
Stinnett Associates describes how they go about amending this viewpoint perfectly, by urging internal auditors to focus on “process improvement” as the real essence and philosophy of the role, rather than letting stakeholders confer amongst themselves that IAs are only in it to stifle business, innovation, creative thought or operational independence.
Owning this new narrative is super important: IAs are integral to business success, and vital elements in non-auditors doing even better in their roles thanks to IA’s fastidious attention to regulatory and ethical performance.

Myth: Aren’t internal auditors just accountants by another name?
While accounting provides some critical skills needed to be a successful internal auditor, the industry draws from a wide range of backgrounds and skills, from tech and IT to engineering.
The real skills needed – diligence, a high regard for quality services, fastidiousness, great communication and creative thinking – means that people from a wide variety of backgrounds with training can enjoy a career in internal audit.

Myth: Internal audits are the same as external audits
No, they are not the same. While some parts of the day-to-day job of an internal and external auditor are parallel – both evaluate controls, report to seniors, and work with audit programmes – the outcomes and flexibility of internal auditing drastically differs.
As Moss Adams in their presentation titled Busting the Myths Surrounding Internal Audit states, “(IA) focuses on future events by evaluating controls to help the organisation accomplish its goals and objectives” rather than just meeting “materiality thresholds”.
By offering a service more “broad in scope” than external auditors, IAs provide direct, measurable business outcomes and improvements.

Myth: Internal audit is a lonely job
While “independence” of an IA’s role is a prerequisite, the truth of the matter is internal auditors straddle every department in an enterprise.
As mentioned above, the job is focused entirely on improvements, working closely with internal controls (which is a separate but often conflated field) to mitigate fraud and perfect business outcomes. This means that IA professionals get to work with their own team and every department in a company.

“Audit International are specialists in the recruitment of Auditors and various Corporate Governance Professionals including Internal Audit, Cyber Security, Compliance, IT Audit, Data Analytics etc across Europe and the US.

If you would like to reach out to discuss your current requirements, please feel free to reach us via any of the following:
Calling
• Switzerland 0041 4350 830 59 or
• US 001 917 508 5615
E-mail:
• info@audit-international.com”

After the rollout of the vaccine and the end of lockdown restrictions, businesses are picking up and hiring into their Internal Audit departments and many candidates seem curious to take the next step in their audit careers.

COVID-19 has quickened audit firms’ adaption toward new ways of operating. Shifting to a remote and flexible working schedule by audit firms and the companies adds a new challenge already faced in adapting the audit to a tech-evolving corporate world and placing new demands on audit professionals. However, new ways of working will bring important benefits as well as posing challenges that have to be addressed.

Traditionally, firms have emphasized personal integrity and professional skepticism in audit professionals, and these attributes will undoubtedly remain vital. But in the new and fast-developing environment, auditors will also need to develop even deeper knowledge of business, a powerful curiosity about technologies and an agile mindset that embraces disruption.

This demonstrates the motivation of both candidates to find a new role and clients to hire into the Internal Audit profession. These figures have also likely been positively affected by the relative ease in which most interviews are now being conducted by video call rather than in-person. While auditors still retain their independence within organizations, they are nonetheless now expected to take a more collaborative, forward-looking approach to Risk Management and Governance. As a result, Internal Audit is increasingly seen as a value-add function rather than a cost center.

In order to achieve the expectation of audit objectives in hybrid environment, it is necessary for the auditor to plan well in advance with the following recommendatory steps.

-Gain an understanding of client business either through documented SOPs, policies to understand its Operations, Compliance and Financial area

-Being adept with trending technologies

-Being able to use the latest audit tools and techniques

-Adapting to the need for agility

-Being able to address regulatory compliance in a changing landscape

-Interdisciplinary approach to audit

-Effective communication skills at all business levels

-Ability to understand emerging technologies

-Ability to predict future challenges

-Ability to take a business-centric approach

-Ability to plan and execute, keeping the big picture in mind

-Ability to integrate adaptability into the audit design

-Ability to increase focus on key risk areas to improve assurance

-Ability to use process mining to analyze data

-Decide on the language to be used for the interview and ensure everyone involved speaks that language.

The auditors need to be more practical and realistic for carrying out audit involving Information Technology as a tool rather than as a barrier.

 

“Audit International are specialists in the recruitment of Auditors and various Corporate Governance Professionals including Internal Audit, Cyber Security, Compliance, IT Audit, Data Analytics etc across Europe and the US.

If you would like to reach out to discuss your current requirements, please feel free to reach us via any of the following: 

 Calling  

  • Switzerland 0041 4350 830 59 or
  • US 001 917 508 5615

 E-mail:

  • info@audit-international.com”

Since the introduction of new auditing rules throughout Europe, many auditing firms are now reviewing how they tender for contracts. Under the new rules large listed companies are required to tender their audit contracts once every ten years. The new audit reforms were introduced to generate more competition between audit firms. Already following these new measures there have been a lot of audit contracts changing hands.

Also introduced was the decision to cap the fees companies can pay their auditors and prohibit the provision of certain services that auditors also provide. It is these issues that are causing the problem on auditors tendering strategies. The new audit reforms have imposed a 70% cap on fees generated by firms for non-audit work, while certainnon-audit services, such as tax advice have been banned altogether. The fee cap will be calculated based on the average of fees paid in the last three consecutive financial years for the statutory audit.

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KPMG have managed to retain their audit contract with Greggs, the pie and sandwich chain. The Big 4 firm has been Greggs’ auditors since the retailer listed on the London Stock Exchange in 1984. Greggs have not put their audit contract out to tender since 1984.

It was announced in the company’s annual report in 2013 that the tender process would begin in March of this year. KPMG managed to retain it audit contract with Greggs. Last year it was reported that KPMg was paid more than £160,000 for their work.

A number of audit tenders have arisen in the past 12 months, many driven by revised UK governance rules and impending EU-backed legislation to create more competition in the market and increase quality.

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Many companies are changing their long term auditors as a result of the new audit rules that have been put in place. The new audit rules state that companies must change their auditors every 10 years. The aim of these new rules is to prevent longstanding and cosy relationships between corporate clients and their auditors as well as having more competition within the audit market.

There have already been a lot of changes in the audit market recently with more and more changes happening.

Some of the most recent changes include Barclays bank where PWC have been the banks auditors for 117 years. The bank is considering when to start the tender process. Last year the Big 4 firm was paid a total of £44m for their services to the bank.

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The European Parliament has passed new audit rules to address investor concerns over the excessive volume of non-audit services, long tenure of audit relationships and the quality of audit communication and this is likely to impact New Zealand subsidiaries and branch operations of these EU companies.

The new rules see:

– capping non-audit services at 70% of the audit fee

– restricting some of the tax and advisory services that a company may obtain from its auditor

– requiring audit rotation at least every 10 years but in certain circumstances this can be extend

– requiring more informative audit reports, and reports by the auditor to the audit committee.

It is thought that while these new laws will help European investors, it will also impact other countries around the world including New Zealand.

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The London Stock exchange has changed their auditor for the first time since becoming a listed company over 12 years ago. This is the latest company to change auditors since the introduction of the new audit rules brought in throughout Europe and the UK.

The UK exchange are to drop their current Big 4 auditor firm PWC and replace them with Ernst & Young following the completion of the audit for the year ending March 2014.

Earlier this month, the EU audit reform package was adopted, aimed at shaking up the longstanding and cosy relationships between corporate clients and their auditors.

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The FTSE 250 Company Interserve is to change their auditors from Big 4 firm Deloitte to Grant Thornton.

The change of auditors is as a result of the introduction of the new UK and EU audit rules. These new rules require companies to put their audit out to tender at least every 10 years. Read more in our previous blog New EU Audit reforms passed in European parliament. The new rules are to encourage greater competition in the audit market.

Interserve are a multinational support service and construction company. The firm announced in March of this year that it had concluded its formal tender process for a statutory audit contract. Following a competitive tender process Grant Thornton was chosen as the firms new auditor replacing Big 4 firm Deloitte. Deloitte had been the company’s auditors for 15 years.

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Baker Tilly is to join RSM International network. Baker Tilly is to become accountancy network RSM International’s UK member firm.

The firm will formally join the network later this year following completion of their current notice period with existing network Baker Tilly International.

During the transition period, the firm will continue to trade as Baker Tilly, but will make it clear that it is an independent member of RSM International, after which the firm will then adopt the global network name and corporate identity.

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Big 4 firm PWC has completed its acquisition of Booz & Co following regulatory and partner approval. Booz & Co is an international consultancy business and currently employs around 3,000 staff including 130 partners worldwide.

Booz & Co are now to become part of the PWC network and the consultancy firm will now be known as Strategy &, which will be used alongside the PwC name and brand.

The company has already rebranded its website to Strategy &.

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