KPMG Australia's Transparency Report outlines how we drive audit quality, our systems of quality management, and how we are working to improve it. This 2023 report covers the activities of KPMG Australia1 for the financial year to 30 June 2023.
KPMG Australia is committed to being a leader in audit quality, aiming to inspire the confidence of our clients and their investors and strengthen the capital markets and their economies. We believe audit quality is fundamental to maintaining public trust in capital markets.
This year has been unlike any other, with our profession under the spotlight in unprecedented ways – heightening community awareness and expectations on integrity, confidentiality and trust. We recognise greater transparency is needed for the public to gain insight into audit services.
This report uses our Global Audit Quality Framework to outline our approach and actions to deliver quality and consistency in our audits – for which everyone at KPMG Australia is accountable. Through our Audit Quality Transformation, which is outlined in the Transparency Report, we are confident our actions and increased investment in technology and people will drive a step change in audit quality improvement.
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ASIC Audit inspection results FY23
18 October 2023
The Australian Securities and Investments Commission (ASIC) has released its first aggregated Annual Financial Reporting and Audit Surveillance Report 2022-23, seeking continual improvement across the entire financial reporting chain. It has changed the way it reports on the outcomes of its auditor surveillance activities to provide insights to ensure both companies and auditors deliver high-quality financial reports and audits respectively.
As noted in ASIC’s report, a smaller number of audit engagements were inspected across the firms in comparison to prior years with 15 files examined this year for the audit profession, compared to 45 last year. Of those 15 files ASIC had findings in 11 of them. ASIC has advised no percentages of findings will be reported for any individual firm this year.
For KPMG, ASIC selected two higher-risk, complex audit files from the 5,000-plus opinions we issue each year for our 1,500 plus audit clients – down from eight files last year. As part of the inspection process, ASIC reviewed select areas of these files, typically those requiring higher judgement or estimation.
We use both external inspections and internal monitoring against accepted relevant benchmarks to evaluate our performance, understand the quality of our audit work and prioritise areas for improvement. We have seen an improvement in our own internal quality review scores – with a pass rate for financial statement audit engagements reviewed in FY23 of 86% (FY22: 82%).
We respect the importance of ASIC’s role and remain fully committed to continual improvement in audit quality. In October 2022, we commenced a multi-year holistic Audit Quality Transformation designed to drive a step change in our audit quality and to improve the audit experience for our clients and people. This has already established strong momentum, with several key achievements since our launch and our internal monitoring confirms we are making good progress. We remain fully committed to our Audit Quality Transformation Plan and expect improvements to be continuously realised moving forward.
Our commitment to audit quality remains one of the firm’s highest priorities.
Julie Cleary
National Partner in Charge
Audit & Assurance, Enterprise
Julian McPherson
National Managing Partner
Audit & Assurance
The System of Quality Management Statement of Effectiveness
As of 30 September 2023
The annual evaluation of KPMG Australia's System of Quality Management as of 30 September 2023 concluded that the System of Quality Management provides KPMG Australia with reasonable assurance that the objectives of the System of Quality Management are being achieved in accordance with ISQM1 and ASQM12.
The objectives of the System of Quality Management are to provide KPMG Australia with reasonable assurance that:
- KPMG Australia and its personnel fulfill their responsibilities in accordance with professional standards and applicable legal and regulatory requirements, and conduct engagements in accordance with such standards and requirements; and
- Engagement reports issued by KPMG Australia or engagement partners are appropriate in the circumstances.
- KPMG Australia, KPMG Fiji and KPMG Papua New Guinea (PNG) formed a South Pacific Practice effective from 1 July 2021. The operations of KPMG Fiji and KPMG PNG are not captured as part of this report. Refer to Appendix 1 ‘Key legal entities and areas of operation’. Audit activities in this report represent our External Audit business units within the Audit, Assurance & Risk Consulting division and within the Enterprise division. The Enterprise division serves mainly private and mid-market clients.
- International Standard on Quality Management 1 (ISQM1) Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, issued by the International Auditing and Assurance Standards Board; Auditing Standard ASQM1 Quality Management for Firms that Perform Audits or Reviews of Financial Reports and Other Financial Information, or Other Assurance or Related Services Engagements, the Australian equivalent to ISQM1, issued by the Auditing and Assurance Standards Board.
