OUR CULTURE STORY | AUTUMN 2019 18
CHAPTER EIGHT
THE VALUE OF VALUES
A matter of quality For the second year running, we are proud that 88% of our firm’s audits reviewed in 2018/19 achieved the FRC’s top ranking for quality, with none requiring significant improvements. In the wider context of the other firms, no one else has been able to surpass these results, and this is against a backdrop of high standards expected by the regulator increasing year-on-year. For many years, commentators have considered audit firm size to be a proxy for audit file quality. If ever that particular view held water, it certainly does not now. Nevertheless, we recognise that we are in a constant improvement environment and we continue to make investments in our people and procedures in order to achieve and maintain the highest industry-wide standards. This is why independence and ethics surround the way we behave in business and underpin our BDO Values. These rely on trust, respect, honesty and fairness, and impact all areas of BDO’s business. Quite simply it’s about ‘doing the right things, right’. Whether it’s the Chartered Institute of Taxation, one of the Institutes for Chartered Accountants, the Society of Trust and Estate Practitioners or the Insolvency Practitioners Association, each of the professional bodies requires their members to act in accordance with five fundamental principles: 1. Integrity 2. Objectivity 3. Professional competence and care 4. Confidentiality 5. Professional behaviour Because BDO LLP is a member firm of the Institute of Chartered Accountants in England and Wales (ICAEW), every single one of our 5,000 people is required to abide by the ICAEW Code of Ethics – even if they
are not a member of the Institute or any other professional body. At BDO, we firmly believe living by these principles is a privilege, not a burden. They are already embedded in the firm’s values, our commitment to quality, our strategic framework and critically our culture. A matter of culture Audit quality and culture are intrinsically linked. Integrity, objectivity, independence and professional scepticism are the foundations of a strong audit practice and are all areas we take extremely seriously. Audit is core to BDO’s business and accounts for a third of our total revenues. It is therefore something we pay a huge amount of time and care in getting right. In particular, we were pleased in last year’s ‘culture’ thematic review to see the FRC highlight our culture of analysing the root cause of any problems and fixing them early on. We were pleased to see the FRC highlighting that firms need a culture where achieving a high-quality audit is valued and rewarded, and which emphasises the importance of ‘doing the right thing’ in the public interest – in helping society to succeed. We continue to work to cement, promote and embed a culture that is committed to delivering consistently high-quality audits. This very report that you are reading reinforces that we’re keen to provide more extensive and transparent public reporting on our culture to enhance engagement with stakeholders and to build confidence and trust. You can also read more in our 2019 Transparency Report. The Financial Reporting Council defines Culture as “a combination of the values, attitudes and behaviours manifested by an organisation in its operations and relations with its stakeholders.”
THE ONLYWAY IS ETHICS DAVID ISHERWOOD
Ethics Partner and devout Northerner. Participates on committees with many acronyms (WCCAEW, ICAEW, IFAC FOF, AE, GPPC, PRG…) We live and work in a time when the public spotlight is focused on the quality of work from, and the role of, accountants in the UK. Our economy and capital markets rely on informative and accurate financial reporting; and independent audit plays a key role in that. High-quality audit is of significant public interest and societal value, establishing trust in both transparent corporate reporting and integrity in business as a whole. It is clear that the audit market, in particular, is in need of reform to widen choice, ensuring that those outside the very largest firms can compete more effectively, guarding against conflict of interest, fostering innovation and enhancing audit quality. However, solutions that purely focus on improving competition, while ignoring either the regulation of the entire financial reporting ecosystem or the needs of users, will not fix the situation. Every accounting and advisory firm needs to pay attention to quality now more than ever. Through its Audit Quality Review (AQR) team, the Financial Reporting Council (FRC) rightly continues to challenge the profession to raise its standard.
chapter eight
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