FOR MANUAL HEADERS UPDATE HERE (as well as on the main front cover):
2019 Transparency Report Deloitte LLP and Deloitte Limited
2019 Transparency Report Deloitte LLP and Deloitte Limited 30 September 2019 Audit & Assurance 2019 Transparency Report | Deloitte LLP and Deloitte Limited
Regulatory context
This Audit Transparency Report (Report) has been prepared in accordance with Article 13 of Regulation No 537/2014 of the European Parliament and of the Council of 16 April 2014 (the EU Audit Regulation). The EU Audit Regulation came into force on 17 June 2016 and requires the publication of an annual transparency report by audit firms that carry out statutory audits of public interest entities. It supersedes the provisions of the Statutory Auditors (Transparency) Instrument 2008.
In January 2010, the Institute of Chartered Accountants in England & Wales (ICAEW) published the Audit Firm Governance Code (the Code), which sets a benchmark for good governance and applies to UK firms auditing 20 or more listed companies. A revised Code was published on 27 July 2016, applicable for financial years beginning on or after 1 September 2016. This Report includes disclosures required by the revised Code and explains the steps taken to comply. A reconciliation to the revised Code is provided in Appendix 7.
Deloitte Limited, the Deloitte practice operating in Gibraltar, became a subsidiary of Deloitte LLP1 on 1 June 2017 and is also required to prepare an audit transparency report under Article 13 of the EU Audit Regulation. This Report relates to Deloitte LLP and Deloitte Limited’s principal activities in the UK and Gibraltar respectively for the year ended 31 May 2019, unless otherwise stated.
Deloitte LLP also has a subsidiary in Switzerland that prepares its own Transparency Report. Consequently Deloitte’s activities in Switzerland are not covered in this Report, unless otherwise stated.
1. Deloitte Limited is a subsidiary of Deloitte LLP (collectively, Deloitte or the firm), which is the United Kingdom affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited ("DTTL"), a UK private company limited by guarantee. DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NSE LLP do not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.
2 Contents
Highlights 4 Leadership messages 6 Our purpose and commitment: instilling trust and confidence
Message from Jack Kelly, Head of Audit Quality & Risk Management 13 Delivering quality audits 15 External and internal audit quality monitoring 27 Governance, legal structure and Deloitte network
Report on the work of the UK Oversight Board 34 Deloitte UK: legal structure and ownership 38 Deloitte UK: governance and management 39 Deloitte Gibraltar: Legal structure, ownership and governance 44 NSE governance 45 Deloitte network 47 Conducting business with honesty, integrity and high standards of professional behaviour
Message from Oliver Grundy, Ethics Partner 49 Independence, conflicts and public interest 51 Managing risk 57 Appendices
Appendix 1: Executive Group and UK Oversight Board members 61 Appendix 2: Financial information 68 Appendix 3: Public interest entities 70 Appendix 4: Audit quality monitoring 75 Appendix 5: Principal risks and mitigations 87 Appendix 6: EU / EEA audit firms 91 Appendix 7: Audit Firm Governance Code and EU Audit Regulation disclosure requirements 93 2019 Transparency Report | Deloitte LLP and Deloitte Limited
Highlights
Over 82 hours’ training per qualified Audit staff member/partner in FY19
13,500 t e o ts s ne e e
Page 6 Page 7 Page 9
Richard Houston, our Senior Stephen Griggs, our Managing Jim Coyle, Independent Non- Partner and Chief Executive, Partner, Audit & Assurance Executive, talks about the work talks about his priorities for and Public Policy, talks about of the INEs in promoting audit the firm as he starts his tenure, his views on the proposed quality, helping the firm secure and about the importance reforms and on the future its reputation and reducing the of audit to what we do as a of audit risk of firm failure. He also professional services firm and talks about his first impressions to the UK economy of the firm, including around its culture
589 eo le recruited
4 2019 Transparency Report | Deloitte LLP and Deloitte Limited
Page 13 Page 51
Jack Kelly, our Head of Audit Quality & We explain our approach to Risk Management, gives his views on the client and engagement value of audit, while recognising we must acceptance, including continue to strive to bridge the gap independence and between what our audit service provides conflicts checking, and and what those who rely on our work want how we consider the public interest in our acceptance decisions Page 15 Appendix 4 We explain what we’re doing to promote a good culture across the firm and how We set out our Audit Quality we measure and reward audit quality Inspection results, and how performance we are responding to the FRC’s findings Page 34
Steve Williams, Chair of the UK Oversight Appendix 5 Board, talks about our current UK governance arrangements, including We set out the Principal the role of the INEs, and our plans to risks facing our firm and how enhance them we are managing them.
Page 49
Oliver Grundy, our Ethics Partner, talks about how we protect the integrity, objectivity and independence of our whole firm, including our Audit & Assurance business. He also provides a summary of the whistleblowing matters reported during the year and what we are doing to address the issues they highlight
Results of AQR reviews of the firm