Transparency Report 2016-2017 Becoming a purpose-led and values-driven organisation PricewaterhouseCoopers Accountants N.V. www.pwc.nl Foreword by the chairman Report of the Transparency Report Assurance Board Report of the 2016-2017 Public Interest Committee Monitoring quality Foreword by Report of the Report of the Public Governance the chairman Assurance Board Interest Committee Appendices Acknowledgements On our way to a new balance The Assurance Board reports on the The PIC reports on how it has discharged its developments in the past year clustered supervisory responsibilities to safeguard the around the three strategic priorities: public interest within PwC. - Bring the journey to life - Build quality business - Grow and innovate Monitoring Governance Appendices quality - Our definition of quality - Our governance - Legislative and regulatory framework - Our quality management system - Statements (EU directive) - Our process of quality improvement - Independent Assurance Report - List of EU/EEA audit firms that belong - One integrated quality report to the PwC network of member firms - List of public interest entities This is a navigable PDF file. Click - Framework for the pillars of our on the report’s chapters to the left quality management system - Reporting criteria of the quality indicators of the page to navigate through this - Glossary Transparency Report. PwC | Transparency Report 2016-2017 2 Foreword by the chairman On our way to a new balance Report of the Assurance Board Report of the The financial year 2016-2017 has been a year focussed on quality improvement, Higher client expectations Public Interest Committee cultural change and innovation. We have progressed with our change programme Audit quality is the responsibility of the auditor, towards becoming a purpose-led and values-driven organisation. We see this as a but the auditor cannot achieve this without Monitoring quality good collaboration with the client. We are key element in regaining society’s trust in our core responsibility. At the same time, demanding more and more of the organisations Governance we must also recognise that we are not there yet. The number of issues the AFM we audit, both in regard to the quality of their identified in our audit files is still too high. This must be, and can be, improved – internal control systems and the extent to which Appendices and at a faster pace. In this Transparency Report, we would like to take you with us they facilitate our audit process. For some organisations this is taking a bit of getting used Acknowledgements through this journey. to. We are focussing our efforts on clients that value an audit appropriate for their organisation. The need for transformation and our ability to connect and really listen. Our In some cases, we have no option but to say no The notion is gaining ground that the move most recent staff satisfaction survey indicates to new audit engagements or to say goodbye towards becoming a purpose-led and values- that 80% of our Assurance staff are now familiar to clients where we conclude that they do not driven organisation is at the very heart of our with, and debate, PwC’s purpose and values in sufficiently share our quality objectives or can transformation. Our Journey is a ‘must have’ their everyday work. not or will not allow us to perform our audit to and not a ‘nice to have’, and the public interest the standards of quality currently expected by must be paramount. We are learning to view More colleagues spending more time society. We recognise here that it is important to our clients’ issues through the eyes of their We are spending more time on the audits and keep the dialogue open with the organisations stakeholders, and this is also very much in the on our audit files, and we are doing this with that have a statutory audit requirement and also interests of the clients themselves. We do not a greater number of permanent staff. Despite with their stakeholders. view dilemmas from our own perspective or from this, the pressure of work is still high and we our client’s perspective but from the broader are continuing our efforts to increase headcount societal perspective. We challenge our clients to further by taking on more staff and holding on to get into the debate, and we are opening ourselves them for longer. This is not always easy given the up more and more to constructive feedback ongoing tight labour market, so we are looking to by being receptive to discussing troublesome focus even more on technology and transferring issues and looking to put our house in order. We standardised work to specialist delivery centres. “PwC aims to contribute to are using our stakeholder dialogues and client This not only improves quality and consistency, it trust in society and to help solve evaluation discussions to determine the extent to also brings a better balance between the volume which we are living up to our values, the values of work and the resources available as we aim for important problems. That is our we re-defined during 2016-2017. These values greater stability in our planning. are also attracting more and more debate within purpose and therefore also the our teams, and we are increasingly seeing that compass for all we do.” clients select us when we are able to differentiate ourselves with our collaborative team approach PwC | Transparency Report 2016-2017 3 Foreword by the chairman Report of the Assurance Board Report of the Remaining attractive to talented people accountantsorganisaties’), which addresses a Public Interest Committee Offering an attractive work environment for number of sector dilemmas, underscores yet talented people remains high on our agenda. All again the need for this. Monitoring quality the change and regulation we are facing asks a lot of our people. The negative perception of The audit profession still does not have a Governance the audit profession often contrasts with the definition of quality that has society-wide enthusiastic commitment shown by our staff “The negative perception acceptance. There is a lack of clarity across Appendices to do things as well as they can and in a way in of the audit profession society as to the role of the auditor in identifying which our purpose and newly redefined values and investigating fraud and in matters related Acknowledgements are being embraced. For the third consecutive often contrasts with the to a client’s going concern. This expectation gap year, the results of our staff satisfaction survey is unhealthy and it needs to be closed. But we were the best ever. If we are to attract and retain enthusiastic commitment cannot achieve this alone; the legislative and talent, which is a key ingredient of quality, we shown by our staff to supervisory bodies also need to play their part. need to offer a sector with proper perspective and with societal relevance. This is also an area do things as well as Our transformation to becoming a purpose-led where we are aiming to achieve a new balance. and values-driven organisation is in full flow. they can.” Our five newly defined values are focussed more Maintaining dialogue with stakeholders on on the interests of society (see page 23), and our the dilemmas the sector faces commitment to the three strategic priorities of Restoration of trust is not just a question of our change programme – continuing our journey, improving quality, but also of being in continuous working on continuous quality improvement and dialogue with stakeholders regarding the focussing on innovation and growth – is rock dilemmas the audit sector is facing and about solid. At the same time, the expectations of our how we deal with them. Societal responsibility stakeholders are constantly challenging us to and transparency are inseparable from each press on with change. So, we are on our way to other, and they require candour and openness to a new balance, and the progress we have made constructive feedback, particularly about matters during the past year is set out in the Report of the such as our business and remuneration models. Assurance Board. We are on a steep learning curve and we are committed to taking this challenge on. Ad van Gils The recent parliamentary debate about Chair of the Board the Law on supplementary measures for PricewaterhouseCoopers Accountants N.V. audit firms (‘Wet aanvullende maatregelen PwC | Transparency Report 2016-2017 4 Foreword by the chairman Report of the Report of the Assurance Board Assurance Board 1. Continuing our journey 2. Focussing on continuous quality improvement 3. Focussing on innovation and growth Report of the Public Interest Committee Monitoring quality Governance Appendices Acknowledgements PwC | Transparency Report 2016-2017 5 Foreword by the chairman 1. Continuing our journey Report of the Assurance Board 1. Continuing our journey 2. Focussing on continuous quality This Report of the Assurance Board sets out the developments of the improvement past year, clustered around our three strategic priorities. Priority 1 | Continuing our journey 3. Focussing on innovation and growth Our aim is to be an organisation with its societal antennae well- tuned and with our purpose (our Why) as the driver for our Report of the decision-making regarding which engagements we take on, how we Priority 2 | Focussing on continuous Public Interest Committee do them and how we discharge our responsibilities and define our quality improvement success. The characteristics of an organisation like this are set out in Monitoring quality a strategic vision, which we call the PwC Vision 2020. For the Dutch elements of the PwC network of member firms, we have translated Governance Priority 3 | Focussing on innovation and growth this vision into five areas of focus (our What). More information Appendices on the PwC strategy, Vision 2020, is included in PwC NL’s Annual Visual 1 Our journey and the three strategic priorities Report 2016-2017.