In this section, we outline how, in addition to having the right policies and procedures for quality in place, we are innovating in the delivery of the audit itself and leveraging new technologies and platforms.

Investing in the technology and methodology our teams use to deliver quality

We have been investing significantly in evolving our audit capabilities and we will continue to do so in the coming years. This includes a new global technology-enabled audit workflow, and an enhanced audit methodology, delivered through the KPMG Clara platform — our smart, modular audit platform — capable of continually integrating new and emerging technologies, with advanced capabilities embedded that leverage data, automation and visualization. Data & Analytics (D&A) is integral to the way we obtain audit evidence and interact with clients in the digital era.

Our high-quality audit process will continue to include:

  • timely partner and manager involvement throughout the engagement
  • access to the right knowledge including involvement of specialists, training and experience requirements, and relevant industry expertise
  • critical assessment of all audit evidence obtained during the audit, exercising appropriate professional judgment
  • ongoing mentoring, supervision and review of the engagement team
  • managing and documenting the audit.


Bringing consistency through our methodology

Our audit methodology, tools and guidance are:

  • globally consistent and fully compliant with International Auditing Standards (ISAs) and are supplemented to comply with local auditing standards and regulatory or statutory requirements by member firms
  • centered on identifying risk, focusing on risks of material misstatements and the necessary audit response
  • made available to all KPMG audit professionals and required to be used, where necessary
  • applied even where local auditing standards are less demanding than the ISAs.

The audit methodology is set out in KPMG's Audit Manual (KAM) and includes additional requirements that go beyond the ISAs, which KPMG believes enhance the quality of the audit. The audit methodology emphasizes applying appropriate professional skepticism in the execution of audit procedures and requires compliance with relevant ethical requirements, including independence.

Enhancements to the audit methodology, guidance and tools are made regularly to be in continuing compliance with standards, emerging auditing areas of focus and audit quality results (internal and external). Key topics include accounting estimates, internal controls, revenue recognition, group audits, audit sampling and risk assessment.

KPMG member firms may add local requirements and/or guidance in KAM to comply with additional professional, legal or regulatory requirements.

In the spirit of continuous improvement, significant investments are currently underway to revise and enhance our audit methodology.

Utilizing effective audit tools

The current KPMG audit workflow is enabled through eAudIT, an activity-based workflow and electronic audit file. eAudIT is KPMG's audit documentation workflow that allows 75,000+ professionals to complete high quality and consistent audits. eAudIT integrates KPMG's audit methodology, guidance and industry knowledge, and the tools needed to execute and document the audit work performed.

eAudIT can be 'scaled' to present the relevant requirements and guidance, depending on the nature of the entity to be audited and in accordance with professional standards and applicable legal and regulatory requirements. It provides direct access to our audit guidance, professional standards and documentation templates.

In parallel with updating our audit methodology, we are currently redesigning our workflow so that it will be more intuitive with contextual guidance and data enabled.


The new 'KPMG Clara Workflow' that will also incorporate our updated audit methodology is being piloted in 2018 and planned for initial deployment globally in 2019, with full deployment beginning in 2020.

Embracing innovation and technology

As indicated above, we are making significant investments in our audit methodology and workflow, and have already created a smart platform, KPMG Clara. These developments are designed to keep KPMG at the cutting edge of what modern technology makes possible, driving better and deeper audit insights. The changes will drive improved audit quality, and consistency in execution of audits, and strengthen member firm and global monitoring of engagements.

Bringing it all together: KPMG Clara

In 2017, we commenced the global launch of KPMG Clara — our smart audit platform that brings together our audit Data & Analytics (D&A) capabilities, innovative new technologies, collaboration capabilities and audit workflow.

This represents our ambition to:

  • transform audit execution for our people and clients through new, modern technology-enabled interfaces and collaboration functionality
  • integrate the required capability to digitize the audit and deliver new D&A routines
  • enable an enhanced and redesigned workflow
  • incorporate the development of monitoring capabilities at the engagement level and across engagement portfolios for use by engagement teams and member firms
  • support global leadership's monitoring of the effectiveness of member firm systems of quality control
  • develop an extendable audit platform to enable member firm customization and scale, as well as future capabilities.

KPMG Clara also encompasses the tracking of selected engagement-level indicators by audit teams for an individual engagement and across an engagement portfolio. This provides a summary and visualization of these indicators to:

  • measure audit engagement progress and foster timely issue resolution
  • facilitate audit execution by providing key indicators for prioritizing tasks
  • highlight unexpected results/relationships that may require further investigation.

KPMG Clara will be enriched over time as emerging technologies continue to transform the audit, with areas like cognitive and predictive technology being channeled through KPMG Clara to deliver ever greater capabilities. Through alliances with some of the world's most advanced technology companies such as Microsoft, we are building the future of audit, aligning with technology leaders to bring new insights faster and, with growing capabilities, deliver even more value. KPMG's investment strategy also includes working with universities on important applied audit research and with member firms as they develop advanced technologies.

"In today's world, new and disruptive technologies are emerging at a rapid pace. Blockchain, the cloud, robotic process automation, machine learning, deep learning and natural language processing all have huge potential to change how our businesses operate. The array of new technologies being developed will be a significant driver in increasing audit quality. They will enable us to obtain the corroborating evidence we need for an audit opinion faster and more accurate than ever before." — Kristy Carscallen, Canadian Managing Partner, Audit, KPMG in Canada

Creating the new KPMG Clara Workflow

Building on the launch of KPMG Clara in 2017, we are creating a new workflow that will be used by our audit teams to execute and document KPMG audits. The new workflow will guide audit teams through a series of steps in a logical sequence, with a clear display of information and visuals, knowledge and guidance available at the moment of need, and with embedded advanced D&A capabilities. The workflow and methodology will also be scalable — adjusting the requirements to the size and complexity of the audit engagement. This globally driven project will significantly enhance the execution of an audit by KPMG professionals and drive improvements in audit quality.

KPMG Clara Workflow will incorporate the development of monitoring capabilities (e.g. data mining) at the engagement level for use by member firms. Once the KPMG Clara Workflow has been fully rolled out, the predecessor audit workflow tool, eAudIT, is expected to be decommissioned (in our 2021 fiscal year).

Strategically embedding the use of data through Data & Analytics (D&A)

An important element in today's audit is using the power of D&A to interrogate and analyze vast quantities of data. This takes the power and reach of an audit far beyond the traditional capabilities of the past.

KPMG's audit, powered by D&A is designed to:

  • enhances audit quality; by providing a deeper understanding of data populations, giving focus to higher risk transactions
  • is secure; by restricting access to data both in transit and within KPMG's IT environments
  • is transparent; by facilitating detailed analysis to uncover the reasons behind, and root causes of, outliers and anomalies and provide increased visibility into higher risk transactions and process areas.

D&A capabilities and routines are built on principles and professional standards underlying an audit and do not relieve auditors of their responsibilities.

Current capabilities in this area facilitate the performance of planning and risk assessment activities and substantive procedures, and include capabilities that:

  • enable the analysis of account balances and journal entry data
  • automate 'period on period' balances comparison and `time series' evolution information
  • enable the analysis of sub-ledger, transactional data over certain business processes and accounts.

Together with our KPMG Clara platform, we are significantly investing in D&A capabilities and paving the way for the increasing use of emerging technologies such as robotic process automation and machine learning — which will take the power of technology applied in the audit to an even greater level.

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