Building trust in Audit

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Audits play a crucial role in the UK and global economy. They are fundamental in bringing investment and enterprise together and generating trust; which in turn creates confidence in our markets.

We're transforming the way we govern our business and the way we deliver audits, to develop a leading audit practice that has a relentless focus on quality, is constantly evolving to respond to the changing needs of stakeholders and creates rewarding careers. Find out more about the steps we’re taking, from our Head of Audit and in our Transparency Report.

Cath Burnet, UK Head of Audit

Cath talks about culture, audit quality, the role of technology and the varied careers available in Audit

Our year in numbers – highlights

Our people

Number of people (onshore) in Audit / 5,118 1 Oct 22 (1 Oct 21: 5,328)

% of women in Audit /
47% 1 Oct 22 (1 Oct 21: 47%)

% of ethnic minority colleagues in Audit / 37% 1 Oct 22 (1 Oct 21: 35%)

Audit quality

% of individual audits assessed requiring no more than limited improvements / 84% July 2022 (July 2021: 59%)

% of FTSE 350 audits assessed requiring no more than limited improvements / 91% July 2022 (July 2021: 75%)

Number of individual audits assessed requiring significant improvements / 0 July 2022 (July 2021: 1)

High Challenge, High Support in Audit

Audited entities satisfied or very satisfied with level of challenge on key estimates and judgements / 87% (FY21: 81%)

94% / of Audit colleagues feel the culture and tone set by leadership promotes the importance of audit quality 2022 Global People Survey (2021 Global People Survey: 91%)

89% / of Audit colleagues feel our commitment to quality is apparent in what we do on a day-to-day basis 2022 Global People Survey (2021 Global People Survey: 81%)

*2022 Global People Survey data is based on 3,371 Audit colleague responses. 2021 Global People Survey data is based on 2,206 Audit colleague responses.

The changes we’ve made

As a firm, we have made some important changes on our continuing journey to build trust in audit.

Strong and separate governance We are well advanced in our work to achieve operational separation and are committed to working with the Financial Reporting Council (FRC) to help shape the future for a profession which delivers high-quality audits, acts in the public interest, and supports successful and attractive capital markets around the world.

We were the first firm to create a separate Audit Board to oversee and monitor our Audit practice, its delivery of audit quality and the interaction of the Audit practice with the rest of the firm. From 1 October 2021, Claire Ighodaro CBE became an independent audit non-executive and Chair of our Audit Board, together with Melanie Hind and Kathleen O'Donovan who join the firm's Audit Board as independent audit non-executives.

Evolving the audit product to meet changing stakeholder needs We continue to engage with Audit Committee Chairs, Finance Directors, regulators and investors to better understand what’s important to them and how we can continue to develop our audit services to meet and exceed the changing needs of our stakeholders.

Find out more about our response to the BEIS (Department for Business, Energy and Industrial Strategy) consultation.

Audit quality Since 2018, we have implemented an Audit Quality Transformation Programme reaching into almost every part of our business and supported by record investment. This included strengthening our governance, implementing more robust controls, investing in leading technology, initiating a cultural change programme and refreshing our approach to training.

We were the first firm to announce the discontinuation of non-audit services to FTSE 350 companies we audit and to introduce graduated findings in our audit reports.

Culture We have a comprehensive programme to strengthen our ‘high challenge, high support’ culture, where all colleagues feel they are in an open and inclusive environment, are confident to give and receive constructive challenge, and where they have the support they need to do high-quality work.

Transforming the way we deliver audits We have embedded the best new tools, processes and technologies that simplify and streamline our audit, offer a cutting-edge user experience, and further enhance the quality, consistency and efficiency of our audit delivery.

Creating rewarding careers for our people We’re committed to ensuring that our Audit practice continues to be an attractive and outstanding place to build a career and where every talented auditor can thrive, regardless of their background or identity.

The audit profession is at a critical crossroads. There is an urgent need to rebuild trust in the role of audit and enhance corporate reporting for the benefit of all market participants. I have been impressed by KPMG’s commitment to increasing the transparency of their audit governance and their work to instil a high challenge, high support culture in their Audit practice.

Claire Ighodaro CBE / Independent Audit Non-Executive and Chair of KPMG UK’s Audit Board

George and Sophie - ESG assurance

George and Sophie talk about the growing importance and benefits of ESG (Environmental, Social and Governance) assurance

Shaping the future of audit

Lauren’s always been interested in people and culture. When she came back from maternity leave in 2020 the Audit Evolution Board was just getting started and the opportunity to learn more about the wider Audit practice and have her say to help shape the future, really appealed to her.

“The Audit Evolution Board consists of 12 colleagues from third year graduates right up to senior managers, representing teams and regions across Audit – and includes one colleague from outside of Audit. That brings a range of perspectives, a chance to learn from each other and influence important decisions on the future of Audit. I love being part of that.”

Lauren also connects the Audit Evolution Board to the Audit Culture Working Group to help drive initiatives to embed a culture of “high challenge, high support” across the Audit practice.

“I get to work with some fantastic colleagues and I’m really excited about the growing role of the Audit Evolution Board in the decision-making process. We’ve had great support from the Audit Executive and Audit Board, they really value the ideas and challenge we bring and we’re expanding our focus areas, so we can make an even bigger difference. I recently got to meet my Audit Evolution Board colleagues in person for the first time, which was fantastic!”

Analyse this

Andy talks about the growing importance of technology and data analytics in the future of audits.

Andy says the experience of working in Audit, and how audits are carried out, has completely transformed since he started out eight years ago. “There have been huge strides in the use of technology and data analytics to support the auditing process and central to this is KPMG Clara workflow (KCw), a market-leading tool developed by KPMG,” he says. It’s a web-based globally consistent workflow solution which is making a huge difference to how audits are undertaken both in the UK and internationally.

In 2020, Andy was part of the team that implemented KCw on a large audited entity for the first time, all against the backdrop of Covid-19 and delivering the work from home. Not only was this one of our largest audited entities in the UK, it also needed to be compliant with UK and US auditing standards and was a first-year audit – which is notoriously more complex. But the longer term benefits outweighed the short term challenges: “I had a really positive experience working in this new way. KCw drives fundamental changes in both our audit methodology and ways of working, which of course brings with it a steep learning curve. But once you immerse yourself in it, you soon realise how impactful, easy to use and intuitive it is. More time is needed up front now, focused on planning and risk assessment, but it really pays off as the audit progresses. The tool is a smart intelligent workflow that tailors your audit and helps ensure audit standards are met. It’s driving improved confidence in audit quality, drives international collaboration and consistency, and it keeps everything in one place, making it easier to oversee, leading to high-quality ISA600-compliant group audits.”

Andy goes on to say: “We’ve got a fantastic team behind it all, making sure the technology, methodology and people are fully integrated. It’s clear to me that Audit has a bright future.”

Attracting the best talent

From technology, data analytics and ESG assurance through to front-line audits, there are so many ways to build a great career in Audit, says Josh. And he’s keen to show others the way.

“I had spent most of my career in Banking Audit where I learnt so much. And then recently I got the opportunity to move into the Assurance, Accounting and Advisory team to focus on ESG (Environmental, Social and Governance) assurance in financial services,” he says. “We’re able to provide this service to audited entities and non-audit clients and it has so much growth potential. I’m really excited to be part of it.”

The ‘S’ in ESG is where Josh is especially passionate: “I really want to help others to succeed and give them the support and advice they might need to grow and diversify their careers and in their personal development. Being a role model to young people is so important to me. I want to pay it forward,” he says.

At work, for Josh, this has meant helping to drive the planning and implementation of the Black Lives Action Plan for Audit as part of the Black Heritage Working Group. And outside of work, Josh volunteers at a church called SAINT. He serves as a Treasurer and role model to young people in east London.

All of this great work led to Josh being put forward for a Black British Business Award, where he became a finalist in the ‘Rising Star – Professional Services’ category. “It was a really cool experience to be among so many other amazing nominees who are achieving so much in business and leading the way. I’ve been able to follow in the footsteps of some truly inspirational people and I hope to do the same for the next generation. My friends and family were really proud of me becoming a finalist and it also helped to explain to them what I do for a living!” he says.

Audit Quality Transformation Programme

We want to be known for doing the right thing and protecting the public interest as well as having a highly successful, commercially sound business, which has audit quality and innovation at its core.

We have been transforming our audit practice to create a sustainable standalone business, built on innovation and technology, with high audit quality as standard.

In 2018 we implemented a three-year Audit Quality Transformation Programme, backed by record investment. We:

Strengthened our governance
Embraced operational separation
Implemented more robust controls
Standardised the way we execute audits
Invested in leading technology
Led the way by discontinuing non-audit services to the entities we audit ahead of regulatory requirements
Initiated a cultural change programme
Refreshed our approach to training and established our annual KPMG Audit University

I am confident that the significant improvement we have seen in our external FRC inspections, which is aligned to our internal audit quality assessments, demonstrates the positive impact of the continued investment in our audit quality transformation – in particular the commitment and efforts of everyone in our Audit practice. But we are not complacent and our priorities for 2023 demonstrate our ongoing commitment to placing sustainable quality at the heart of our Audit strategy.

Cath Burnet / Head of Audit, KPMG in the UK

Restoring trust in Audit and Corporate Governance

We have submitted a response to the UK Government's consultation into Restoring Trust in Audit and Corporate Governance, which is a once-in-a-generation opportunity to reform the corporate regulatory landscape and positively redefine Britain's role in a post-Brexit world.

We support the broad direction of these reforms and welcome measures that enable the delivery of high-quality audits and better outcomes for investors, and we have already taken action to implement some of the suggested reforms such as operational separation. Establishing the Audit Reporting and Governance Authority (ARGA), with broader responsibilities, will be key, as will the introduction of a new framework for internal controls reporting.

The introduction of a resilience statement is also one of the most important innovations in meaningful corporate reporting in decades and will give shareholders the information they need to understand the threats to a company's business model.

Read our other responses to consultations and reviews on the future of the audit profession

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