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Driving the quality agenda

This section provides an update on our overall approach to delivering audit quality.

This section provides an update on our overall approach to delivering audit quality.

Phase two

Our global audit quality program

KPMG continues to invest significantly in audit quality across the global organization. We are building on our sound audit quality foundations, in terms of how we manage both our firms and our audit engagements.

This means significant ongoing investment in our system of quality management, global monitoring of audit quality, and enhanced support, technology, tools and training for engagement teams.

Our global audit quality program ensures consistent deployment of investments to enhance and support a common approach.

Building consistency through a common approach

Stakeholder interest in audit quality is important to us. At its core KPMG is an audit organization, and continuously improving audit quality is central to who we are.

At KPMG, audit quality is about consistent execution across all firms1 in line with the requirements and intent of professional standards, and within a strong system of quality controls. All of our related activities are undertaken in an environment of objectivity, independence, ethics and integrity. That’s what we stand for; that’s how we measure our people and our practices.

Responsibility for consistently delivering quality starts at the very top of our organization and requires accountability across the leadership and all our partners and employees.

Everyone is accountable for audit quality: from audit teams on the ground, to individual engagement partners, and through to the senior ranks of KPMG firms.

Executing audits consistently within a strong system of quality controls is fundamental to audit quality. We already have a clear framework for delivering audit quality that’s supported by our strong system of quality control. But we know that if we are to continue to deliver quality audits in an ever-changing world, we need to continuously improve.

Sound practice management at a firm level also plays a significant part — in terms of real-time support for engagement teams, and strong support functions to help them carry out their tasks.

The more we standardize the way we conduct our audits, and the more global consistency we build into our processes and technology, the more effective we’ll be at meeting the high standards we’ve set for audit quality. It provides the framework for success.

We closely monitor audit quality across all KPMG firms. We have a Global Audit Quality Monitoring Group — that we are growing in size and scope — that reviews and inspects audits around the world, and a Global Compliance Review Program that provides independent review of member firms’ commitment to quality and compliance with policies.

Valuing feedback and dialogue

We recognize that another important contributor to upholding audit quality is to obtain and act upon feedback from key stakeholders.

Regulators

KPMG International has regular two-way communication with the International Forum of Independent Audit Regulators (IFIAR), principally through its Global Audit Quality Working Group (GAQ WG), to discuss audit quality findings and the actions we have taken to address them. We value the open, honest and transparent dialogue that IFIAR facilitates on global audit quality issues.

Every KPMG firm is expected to maintain professional and respectful relationships with regulators, including proactively engaging, responding to questions in a timely manner and taking appropriate remedial actions.

Client feedback

Client feedback is also important. Firms proactively seek feedback from clients through direct conversations and third- party surveys. Firms endeavor to be responsive to the feedback, while respecting our commitment to the standards.

Listening to our people — Global People Survey (GPS)

Only with engaged talented people can KPMG deliver audits in line with our audit quality definition. Biennially (and annually for Global Board countries2), all KPMG personnel, across all functions, are invited to participate in KPMG’s global independent survey to share their perception about their experience of working for KPMG. The survey provides us with an overall measure of our people’s engagement, as well as insights into the areas in which we could drive further engagement. The results are analyzed across various teams and demographic groups. We gain additional insight on how we are faring on categories known to impact employee engagement.

Importantly, results are reviewed against benchmarks and trends, allowing the tracking of progress and performance with respect to other organizations.

All firms are required to participate in the survey and to take appropriate actions to communicate and respond to the findings of the survey. This includes monitoring survey results including those related to quality and risk behavior, audit quality, and upholding the KPMG values. The GPS results are tracked and appropriate follow-up actions agreed upon. Results and associated action plans are also reviewed as part of the Global Compliance Review Program (for more details on this program, see the ‘Audit quality monitoring and remediation’ section).

Our global audit quality program

Footnotes

1. Throughout this document, references to “firm”, “KPMG firm”, “member firm” and “KPMG member firm” refer to firms which are either: members of KPMG International as a matter of Swiss law; sublicensee firms of KPMG International; or entities that are owned, managed and controlled by an entity that is a member or a sublicensee. The overall governance structure of KPMG International is provided in the ‘Governance and leadership’ section of this report.

2. See our website for a list of Global Board countries.