The 2019 KPMG Australia Transparency Report covers our financial year to 30 June 2019.
Our 2019 Transparency Report outlines how we drive audit quality, our systems of quality control, and how we are working to improve it.
Audit quality is critical to maintaining trust in the capital markets and society more broadly. We know there is more work to do when it comes to demystifying the role of audit and the audit process itself. Pivotal to this is increasing transparency on what we do and how we go about doing it. This year we include our full ASIC inspection report for the 18 months ended 30 June 2018 for the first time.
We hope this year’s Transparency Report provides a useful overview of our audit quality measures and the steps we are taking to ensure every audit is a quality audit.
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Today, ASIC released its consolidated public report outlining the findings of its audit firm inspections for the 12 months to 30 June 2019. This revealed a decline in results for the industry, including our firm. Clearly, an overall fall for the profession and our own result is disappointing.
In addition, ASIC issues a private report to each firm at the conclusion of each inspection period. KPMG has today published our private report in full, giving context to the result, as we continue our efforts to enhance transparency and trust in the auditing profession. This most recently completed ASIC inspection of our audit files covered 10 audits (selected from more than 5,000 audit opinions signed annually). KPMG’s inspection result was 33 percent.
While we do not necessarily agree with all of ASIC’s findings and have maintained there would be volatility in annual results, we take the findings seriously and believe that the process provides valuable insights to improve the quality of our audits. We will conduct an evaluation and act on all matters identified by ASIC.
We note none of the audit opinions or the financial reports relating to KPMG clients examined by ASIC (either as part of their audit inspection program, or their company surveillance program) were restated or reissued.
We fully accept that continued effort is required to further improve our ASIC audit quality results, and to this end, believe that our continued investment and enhancements to our technology and processes will deliver sustainable improvement in the future.
In our submission to the Parliamentary Joint Committee on Corporations and Financial Services on regulation of auditing in Australia we outlined some ideas for advancing trust in audit, focusing on changes to the way the industry works today, additions to the regulatory oversight regime, and thoughts on the audit of the future. We continue to work constructively with ASIC to improve performance and clarity in reporting.
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