Audit firms: Sponsorship Activities

Big accountancy firms have much to gain from sponsorship activities, from supporting charitable causes to developing leadership programmes and promoting sports and arts. Through sponsorship programmes the audit firms not only fulfill their corporate social responsibility by making a positive impact on society and the environment but also maximize value for their business. For the smaller accountancy firms, sponsorship is often more about cultivating business and identity locally. Sponsorships programmes aim to extend positive impact across communities, sports, the arts and business. Audit firms support others to make progress where it matters most whilst offering exciting opportunities for their people and clients to experience who they are in different ways. Firms pursue focused sponsorship partnership strategy where they support a large number of causes aligned with their vision, values and purpose.

Through various sponsorship programmes the Big 4 accountancyfirms spend money all over the world.

EY has been an official partner to the 2012 and the 2014 Ryder Cups. EY also will serve as an official supporter and exclusive provider of professional services in the consulting category for the Rio 2016 Olympic Games. On 15 July 2013, Tate and EY announced a major new three-year arts partnership, making EY one of the largest corporate supporters of Tate.

Deloitte has been a top-tier partner of the Royal Opera House in UK since 2007. British Paralympic Association is the official charity partner of the Deloitte Ride Across Britain event.

PWC sponsor PGA tour event TPC Sawgrass in USA. PWC also supports Irish rugby, Irish Ice Hockey and The America’s Cup.

KPMG's association with the golfers Stacy Lewis and Phil Mickelson reflects shared values.

Additional thoughts

How can the risks be managed?

The key to manage risks in a sponsorship deal is by clearly defining the expectations and objectives of the programme. Choosing the right sponsorship programme and knowing when to end the deal if any controversy erupts can potentially make or break a firm’s reputation. Endorsement insurance can also help protect the sponsor in the event of a scandal or negative publicity. Another method is to sponsor numerous programmes across a range of venues such as sports, arts, culture and charity thus weakening the link between sponsorship and brand.

Week End: Work-Life Balance

How many times our colleagues and bosses told us that we, auditors need to maintain work-life balance? Looks like it become the buzz word meaning not much. But now I know what is the secret! My friendly colleague noticed that I am going to leave late in the evening last Friday supplied me with masterpiece guidance which I am going to share with you. Please take a look at this funny picture :)

Real News: Audit News Briefing: 20 August 2015

Audit-is-cool is pleased to accumulate and provide its readers with the news on audit and related topics:







July 29, 2015

Euro News

Outside auditors should check bank capital, UK industry body says

Bank of England asked ICAEW to initiate public consultations regarding the methodology of audit bank ratios. Please follow link for details:

http://www.euronews.com/business-newswires/3046534-outside-auditors-should-check-bank-capital-uk-industry-body-says/

August 5, 2015

Financial Times

SFO and UK regulator launch probes into Quindell practices

The SFO and the Financial Conduct Authority are both investigating Quindell, after a review by PwC – the accounting firm, identified “aggressive” and “unacceptable” practices. Please follow link for details:

http://www.ft.com/cms/s/0/a355e568-3b69-11e5-8613-07d16aad2152.html#axzz3ijJMako8

August 6, 2015

Reuters

UK Anti-fraud agency to investigate claims firm Quindell

SFO Director confirmed the opening of criminal investigation into business and accounting practices at Quindell. Please follow link for details:

http://www.reuters.com/article/2015/08/06/quindell-results-idUSL3N10G49B20150806

August 10, 2015

Accountancy Live

NAO seeks feedback on draft auditor guidance

The National Audit Office has launched a consultation on the draft guidance to local government auditors in respect of their duties under the Code of Audit Practice. The deadline for responses is set on 30 September 2015. Please follow link for details:

https://www.accountancylive.com/nao-seeks-feedback-draft-auditor-guidance

August 11, 2015

Treasury Insider

UK financial services firms are sitting on data time bombs

In relation to audit trail retention – Director Stuart Clarke of cybersecurity and investigations services gave five proactive steps that financial services firms can take against data privacy breaches. Please follow link for details:

http://www.treasuryinsider.com/2015/08/11/uk-financial-services-firms-are-sitting-on-data-time-bombs/

August 19, 2015

Accountancy Live

Charities under-reporting charitable expenditure

The Charity Commission found that 43% of regulated high-income charities made errors either in their annual returns or their trustees’ annual reports and accounts, with the effect of significantly underreporting the level of their charitable expenditure. Please follow link for details:

https://www.accountancylive.com/charities-under-reporting-charitable-expenditure

August 19, 2015

Accountancy Age

Mid-tier firms avoid listed audits as high regulatory fees bite

Subject accountancy firms have hit out at ICAEW-imposed excessive fees and what they believe are restrictive and prohibitive financial hurdles to entering the listed audit market. Please follow link for details:

http://www.accountancyage.com/aa/analysis/2422182/mid-tier-firms-boycott-listed-audits-as-high-regulatory-fees-bite

Audit Method: Future of Audit. Technology.

The spaceship of an auditor from Earth landed on the green field of the planet Kepler-3571c. The auditor had a task to participate in a stock take of flying horses herd.

This is not another story from Airstrip One rubric. The purpose of this article is to discuss future application of technology in audit, but not as far as in the above introduction.

Survey

The reason for this post was the report “Audit 2020: A Focus on Change” issued by Forbes and KPMG on changes required in in audit services and profession [1]. The reports identifies number of directions in which audit should evolve: technology, culture and regulations, skills, quality and nature of services.

Technology captured might interest. 58% of respondents say that technology has the biggest impact on audit profession according to report. The technology implementation as mentioned in report is expected to impact audit process in following ways (top three are mentioned):

1. Provide tools for more sophisticated analysis;
2. Provide more efficiency;
3. Flag issues that require deeper investigation.

Current situation

The Big 4 audit firms have already taken measures to address challenges of new IT era. All big audit firms have own departments specialising on IT audit and data analysis. The expansions into the IT and related areas is not only organic, but also by means of acquisitions: KPMG purchased innovative HR firm [2], EY purchased a digital design consultancy [3] in 2015; PwC purchased IT consulting firm earlier in 2012 [4].

Nowadays it is common for auditors to use data analysis software to perform journal entries testing. This is because the complex software is needed to analyse large missives of journal entries downloaded from client’s accounting system. CAAT (Computer assisted audit technique) has become a buzz word in audit text books and instructions.

Auditor’s Future

I think it is time for another step forward in the area IT implementation. Audit firms should consider in which audit procedures audit software might totally replace human auditors. There are some shy thoughts regarding this idea in the report discussing that “audit should become continuous and ongoing to provide real-time analysis” [1]. The way this could be realised is by deploying into client IT system the independent software with the rights of ongoing check what has been entered into the system and do checks following algorithm written my human.

Potentially some procedures could be performed by robot-auditor even with current level of IT development in the world. For example, the procedure of invoice vouching could be done by robot. Robot might have questions and  at this point human auditor might interfere.

The replacement of human auditors by robots should be discussed openly to develop new skills required for future audit profession. A report by Deloitte with the University of Oxford predicts that the robot revolution will displace almost 35% of UK jobs [5] and the audit profession should be ready for these changes.  

Sources:

[1] http://www.forbes.com/forbesinsights/kpmg_audit/index.html

[2]http://www.kpmg.com/us/en/issuesandinsights/articlespublications/press-releases/pages/kpmg-to-acquire-towers-watsons-human-resources-service-delivery-practice.aspx

[3]http://www.cityam.com/222508/accounting-giant-ey-swoops-silicon-roundabout-firm-seren

[4]http://www.pwc.com/us/en/press-releases/2012/pwc-completes-acquisition-of-ray-group-international.jhtml

[5] http://www.consultancy.uk/news/1024/deloitte-robots-threatening-a-third-of-uk-workforce

PS. See my previous articles on changes in audit profession:

• New Audit Order: Take 1
• New Audit Order: Take 2. Remodeling audit services
• Pure Audit

News from Airstrip One: Violation of Independence

                                                 

The AKKA accounting qualification has been revoked for the partner, senior manager and manager who worked in audit firm KTC33. The investigation has been opened by firm ethics committee. The secret sources from KTC33 say that audit senior had a conflict with partner regarding preparation of cash flow statement for client. Partner asked audit senior to prepare the cash flow statement to speed up completion of audit. However the audit senior disagreed and reported the case directly to AKKA ethics committee. Management of KTC33 decided not to defend partner and fired audit team management. Our correspondent, Rob, asked for the comments from the audit specialist, Mr Task, in the city of Airstrip One:

• Rob: Is it common case when audit team in fact assists client to prepare financial statements instead of auditing them?
• Mr Task: These cases happen when client personnel do not understand value of audit and not motivated to supply audit team with evidence and deliverables. Audit firm partner should do his/her best a) to understand if client ready to have audit, including if the accounting personnel can provide adequate audit evidence; b) to explain the client the nature of services provided by audit firm. 

Disclaimer: all situations and names in this blog post are not real.

Week-end: Dialogue with manager

I found a funny video on Youtube. May be it is not very attractive in terms of special effects but dialogue does reflect the communication patterns with audit managers in some cases J

Recommended for all audit firm new joiners J

Coffee Break: Big Red Button

I have recently met a colleague at a coffee break. He is assigned at the moment at one of those really messy audit project: the work papers are 50% prepared, conclusions are not clear, work books hard to follow. This made him writing a lot of review comments and to do lots of corrections himself.

As we were going on with our small chat we had a very fresh idea :) The thing is that the work of re-doing something after somebody has already done something incorrectly is so frustrating in audit and in other intellectual jobs. So we suggested that as soon as an audit senior is being promoted to manager level he/she should be supplied with the laptop with just one big red button "Please, re-do!" to write review comments easily. Whenever you push this button it would generate this only comment: "Please, re-do!". :)

Probably the laptop* would look like this one on the pic :)

*Apple Introduces Revolutionary New Laptop With No Keyboard