Our Transparency Report outlines how we drive audit quality, our systems of quality control, and how we are working to improve it. The 2022 KPMG Australia Transparency Report covers our financial year to 30 June 2022.
Audit quality is fundamental to our purpose, and we are committed to maintaining and improving it. Through quality audits, we aim to inspire the confidence of our clients and their investors, strengthening the capital markets and the economies in which they operate.
As markets deal with heightened levels of volatility, audit teams around the world are facing unprecedented challenges and our team in Australia is no exception. Whilst we implemented measures to help mitigate this unprecedented disruption to our profession, we report that the momentum of our audit quality improvement journey, including the multi-year implementation of our new global audit platform, KPMG Clara workflow, has been impacted.
Audit quality remains our number one priority and we are working to improve this through our Audit Transformation Plan which includes many of the initiatives outlined in the Transparency Report.
KPMG Australia ASIC Audit Inspection Report
1 July 2021 to 30 June 2022
28 October 2022
The ASIC Audit inspection reports released today are disappointing. While we acknowledge the challenging environment for auditing professionals in Australia and around the world, we set high standards for ourselves.
We are acting and doing everything we can to continuously improve our audits and have already launched a comprehensive Audit Quality Transformation Plan.
Our result
For KPMG, ASIC selected 8 higher-risk, complex audit files from the 5,000-plus opinions we issue each year for our 1,600 audit clients. As part of the inspection process, ASIC reviewed select areas of these files, typically those requiring higher judgement or estimation. ASIC has reported a significant increase in findings: 48%, compared to the 30% findings rate in FY21. We agree with some, but not all their findings.
Of the 8 files reviewed, there will be no restatements of financial reports or reissuances of audit opinions. Most of ASIC’s findings arise from where ASIC believes testing should have been different, broader or better documented. In ASIC’s own words: “The findings do not necessarily mean the financial report was materially misstated. Rather, in our view, the auditor did not have a sufficient basis for their opinion”.
Our Transformation Plan
Through our Transformation Plan, which has already been presented to ASIC, we are confident our actions, and increased investment in technology and people will drive a step-change in audit quality improvement.
KPMG globally is investing more than $US5 billion in our digital transformation and technology, including deployment of our market-leading new global audit methodology and technology platform, KPMG Clara. We are moving to complete implementation of KPMG Clara by 2024, with ongoing enhancements to data and analytic capabilities scheduled for this financial year. Despite tight market conditions, we are hiring record numbers of people, with increasingly diverse backgrounds and expertise.
We are confident our actions will result in improvements in our ASIC inspection outcomes.
We wish to thank our audit teams and acknowledge the commitment of our people to delivering audit quality in what has been a unique and challenging period. The inspection period coincided with a time of heightened challenges, in particular the pandemic and the strain on accessing experienced, qualified people.
Our determination and ability to improve audit quality is stronger than ever.
Julian McPherson
National Managing Partner
Audit & Assurance
