KPMG International Global Chairman, Bill Thomas, and KPMG International Global Head of Audit, Bill O’Mara, describe our relentless focus on audit quality.
Welcome to the 2017 KPMG1 International Transparency Report, covering the financial year to 30 September 2017.
KPMG has an unwavering commitment to quality and integrity. It begins with the extraordinary people we recruit and the values we instill in developing professionals committed to meeting our responsibilities to clients, capital markets, regulators, communities and the public. Our culture of ‘doing the right thing’ means the way we work is just as important as the work itself.
KPMG is committed to quality and service excellence in every project, bringing our best to clients across geographies and sectors. Each KPMG person has a part to play in delivering quality to clients, and appreciates their critical role and purpose in building trust with the public. We aspire to make
KPMG the standard of trust in our profession based on one central tenet: trust is not a given — it must be earned.
In this Transparency Report, we take the opportunity to provide our stakeholders with a succinct description of KPMG International’s system of quality control and audit quality initiatives, including our focus on continuous improvement and, notably, how KPMG is:
We are committed to working closely with regulators, audit committees, investors and businesses to meet the expectations of stakeholders and welcome ongoing dialogue as we strive for continuous improvement.
At KPMG, we are passionate about audit quality and continuous improvement, and we are united in our commitment to providing independent assurance on what matters to stakeholders. With every audit, you have our commitment to public trust.
As part of our commitment to stakeholders — regulators, investors, clients, our people and the public — we aim to be transparent and open in communicating KPMG’s audit strategy and vision — how the network has developed in terms of people, locations, processes and technology (detailed in the KPMG International Annual Review) — and, specifically, who we are and how we address audit quality.
We recognize the importance of doing the right thing, even when it might be the hard thing to do, which means a relentless focus on ensuring we bring our perspective on audit quality to clients. KPMG is committed to audit quality — a priority underpinned by investing in the talent, technology, solutions and capabilities needed to deliver results to the biggest challenges clients face.
In this report, we provide further insight into the processes, systems, training, tools and methodologies that contribute to KPMG member firms’ audit quality and system of quality control. This report will focus on:
Key aspects of our culture and our focus on quality are driven by global leadership, reinforced and supported by a number of global groups and member firm leadership. More detail on KPMG International’s leadership groups and governance and the KPMG network structure is available in KPMG legal structure and governance.
We’re continuing to invest in audit capabilities, enhance tools and skills and embrace our culture so that the decisions we make and the work we do leave our society, global network and one another stronger for the future.
Through the audit work performed by KPMG firms, we aim to inspire the confidence of clients and their investors, strengthening the capital markets and economies in which they operate.
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services.
KPMG International is a Swiss cooperative formed under Swiss law. It licenses the KPMG trademark and conducts activities for the overall benefit of the KPMG network. It facilitates audit quality across the network by establishing common policies, processes and standards to be applied by member firms. It does not provide professional services to clients itself. KPMG member firms — all of which are affiliated with KPMG International — provide professional services to clients and their Heads of Audit have direct responsibility for audit quality. You can learn more about our network — its structure and governance in KPMG legal structure and governance.
KPMG International has a number of governance bodies:
The Global Board is supported by a number of committees, including an Executive Committee. A number of global steering groups support and drive the execution of strategy with a focus on audit quality including the Global Audit Steering Group (GASG) and the Global Quality & Risk Management Steering Group (GQRMSG). The overall governance structure of KPMG International is discussed in more detail in KPMG legal structure and governance.
The system of quality control set out in this Transparency Report is based on International Standard on Quality Control 1 (ISQC 1), which applies to professional services firms that perform audits of financial statements.
To help all audit professionals concentrate on the fundamental skills and behaviors required to deliver a quality audit, KPMG has developed the Audit Quality Framework, based upon ISQC 1. The framework introduces a common language that is used by all KPMG member firms to describe what they believe drives audit quality and to highlight how each of their audit professionals contributes to the delivery of audit quality.
‘Tone at the top’ sits at the core of the Audit Quality Framework’s seven drivers of audit quality and helps encourage the right behaviors across the entire KPMG network. All of the other drivers are presented within virtuous circle because each driver is intended to reinforce the others.
You will see the relevant sections of the framework referenced as appropriate throughout this report.
While the Transparency Report summarizes KPMG’s approach to audit quality and our audit quality initiatives, the report may also be useful for stakeholders interested in member firms’ Tax and Advisory services, as many KPMG quality control procedures and processes referred to in the report are cross-functional and apply equally to all services offered by member firms. However, unless otherwise stated, the report focuses on what KPMG International does to enable KPMG member firms to deliver quality audits.
We lead by example at all levels in a way that exemplifies what we expect of each other and member firms’ clients.
We work together to bring out the best in each other and create strong and successful working relationships.
We respect the individual for who they are and for their knowledge, skills and experience as individuals and team members.
We seek the facts and provide insight by challenging assumptions and pursuing facts to provide insight as trusted and objective business advisers.
We are open and honest in our communication and share information, insight and advice frequently, and constructively manage tough situations with courage and candor.
We are committed to our communities to act as responsible corporate citizens by broadening our skills, experience and perspectives through work in our communities.
Integrity is a critical characteristic that stakeholders expect and rely on.
Therefore, above all, we act with integrity and are constantly striving to uphold the highest professional standards, provide sound advice and rigorously maintain our independence.
1Unless the context otherwise requires, throughout this document ‘KPMG’ and ‘KPMG network’ (‘we’, ‘our’, and ‘us’) generally refer to the member firms of the KPMG network of independent firms affiliated with KPMG International, a Swiss entity that services as a coordinating entity for the KPMG network. KPMG International provides no client services.