BAKER TILLY UK AUDIT LLP Transparency Report 2014 Baker Tilly UK Audit LLP Transparency Report 2014

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BAKER TILLY UK AUDIT LLP Transparency Report 2014 Baker Tilly UK Audit LLP Transparency Report 2014 BAKER TILLY UK AUDIT LLP Transparency Report 2014 Baker Tilly UK Audit LLP Transparency Report 2014 www.bakertilly.co.uk Baker Tilly UK Audit LLP 2 Transparency Report 2014 Contents Foreword 3 Introduction from the Head of Audit 4 Comments from the Public Interest Committee 5 Legal structure, ownership and governance 6 The RSM International network 20 Commitment to quality 25 Training, recruitment and personal development 32 Ethics and independence 40 Client and financial information 42 Partner remuneration 43 3 Baker Tilly UK Audit LLP Transparency Report 2014 Foreword Welcome to the Baker Tilly UK Audit LLP 2014 Transparency Report. The 2014 year has been an historic one for Baker Tilly as we made the largest acquisition in the history of the firm, radically changing the scale of our service offering. This acquisition secured the jobs and employment rights of RSM Tenon’s 2,300 partners and staff in its 35 offices across the UK whilst providing Baker Tilly access to new geographic locations and clients. Operating in similar markets across the UK and internationally, we believe that bringing the professional skills, strengths and expertise of Baker Tilly and RSM Tenon together as one firm will significantly enhance our offering to the market and provide further opportunities for growth. We have been working very hard to integrate the two businesses which has involved aligning our systems and methodologies. It has been essential for us to do this decisively and efficiently to ensure that our enlarged business can start exploiting the synergistic benefits and other opportunities available to us, whilst cementing our position as a leading mid-tier firm. We are also very pleased to have recently announced that we have taken the decision to join the RSM International network as their UK member firm. RSM International is the seventh largest global network of independent audit, tax and advisory firms, encompassing over 100 countries, 700 offices and 32,500 people internationally. It is encouraging that we are finally seeing signs that the UK economy is mounting a sustainable recovery and we remain cautiously optimistic that this will continue in 2014-15. Most sectors and regions of the economy are showing positive growth trends with signs that business investment and transactional activity are both picking up. Our recent SME survey indicated that confidence is slowly returning. 45% of SMEs are either extremely confident or confident about growth opportunities over the next 12 months and 48% said they expected to increase turnover by 5% or more over the same period. However, caution is still the watchword. 96% said they were happy achieving their current level of success, 74% expect their workforce to stay the same and only 23% intend to increase their sales and marketing spend. We are looking forward to a successful year for our clients and even as we continue to evolve and grow our commitment to excellent client service will never change. Martin Rodgers Chairman, Baker Tilly UK Holdings Limited 30 June 2014 Baker Tilly UK Audit LLP 4 Transparency Report 2014 Introduction from the Head of Audit The year ended 31 March 2014 has seen significant change and opportunity. Our merger with RSM Tenon has not only increased our client base but has provided us with an enlarged audit team with new skills and sector expertise. Both firms shared a common goal to deliver quality audits through efficient working practice and continual improvement. This common goal has ensured that our integration is proceeding well. Our audit approach is based on having an in-depth understanding of our clients’ businesses and their marketplaces. We achieve this through regularly talking with companies to ensure we are aware of their views. This year we conducted our second survey to explore the value of audit. We wanted to find out what businesses think about their audit, what an audit means to stakeholders and whether the proposed legislation seeking to make audits more effective is welcome or not. Encouragingly, a significant majority, 61%, of the businesses that currently have an audit would not want to be released from the audit requirement and while only 25% thought that audit reports filed at Companies House were valuable for investment purposes, 63% thought that the changes to the audit report would increase its value. The positive feeling towards changes to audit reports may just be an acceptance of the inevitable but, hopefully, it also means that there is a growing appetite to invest and seek out investment. As auditors, we need to continue to listen to the marketplace and remain focused on ensuring that audit and its outputs are useful to businesses and stakeholders. We are committed to delivering audits of the highest quality. We work with our firm’s Quality Assurance Department and our Regulators to continually review our work and procedures. Every single member of the audit firm from partner through to trainee embraces this culture. We have rigorous recruitment procedures aiming to recruit only the best and our people are continuously trained, developed and challenged. Over the past three years Jane Bleach, now Head of Quality, Diversity and Partner Development and on the Baker Tilly UK Holdings Board, has actively led the Audit Management Team in building and driving this ethos. As I take the lead in our audit business I am confident that the focus on development and quality in our audit teams along with our values, structure and processes will ensure we are best placed to meet the challenges ahead and to seize opportunities as we have done this past year. Jonathan Ericson Head of Audit, Baker Tilly UK Audit LLP 30 June 2014 5 Baker Tilly UK Audit LLP Transparency Report 2014 Comments from the Public Interest Committee Review and discussion has been held within the firm, which we three were fully involved in, surrounding continuous improvement in governance arrangements. Three years on from the introduction of related functions, and those others • the technical capabilities of the Audit Firm Governance Code (the relevant to maintenance of its those in the audit business and Code), and coinciding with the end of reputation, are in place. We have how those internal authorisation the Independent Non-Executives’ (INE) embarked on having a programme of rights are validated terms of office it was decided that interfaces with the firm and its staff, • staff members’ adherence to the the firm should set up a new body, a understanding in three dimensions the firm’s procedures and to those Public Interest Committee. Its place in ways in which it secures audit quality, external ones to which it is subject the organisational hierarchy would be and interrogating reports from its consistent with the expectations of the senior executives. • how exacting the firm’s Quality Code and its majority would lie with the Assurance function is We meet separately as well as with firm’s INEs. That body is now in place, the Board, and operate entirely • and how matters affecting Audit with the three of us as its complement. independently. The firm is receptive Quality in the round are addressed Invited still to take part in Baker Tilly of all of our requests for information The degree of active and indeed UK Audit LLP Board discussions and and sympathetic to the scope of any pre-emptive co-operation we receive always apprised of both the Board’s enquiry which we set. Indeed, we were continues to be exemplary, which agenda and the other papers its largely the authors of our own terms of in turn favourably impacts on our members see, the new Committee reference, which faithfully reflect the capacity to direct scrutiny of the firm’s allows us an autonomous existence text and the spirit of the Code. operations. We are satisfied about and an emphasised capacity in our The central thread of our work has been the fitness-for-purpose of the firm’s own right to direct enquiries where we to maintain our focus on key indicators policies and procedures, its promotion think fit and of most benefit in terms of the protection of audit quality: of professional ethics, the spirit of of satisfaction of the Code and of the ‘restless discontent’ and prudence it firm’s own best interests. • the degree of emphasis the firm exhibits in the pursuit of audit quality. gives to the quality, frequency, and Revised and extended terms of effectiveness of training of staff reference and an exacting plan for engagement with the firm’s audit- Tom McMorrow Roger Alexander Sir Ian Byatt Chair INE INE Baker Tilly UK Audit LLP 6 Transparency Report 2014 Legal structure, ownership and governance Leadership The Managing Director of Baker Tilly UK Holdings Limited (BTUK Holdings) is appointed by the company’s shareholders to hold office for a period of four years. Laurence Longe was re-appointed for a further four years from 1 April 2014. The Managing Director appoints the remainder of the Board of BTUK Holdings. The Board of BTUK Holdings appoints the National Management Team (NMT) of Baker Tilly UK Group LLP (BTUK Group). The Board is responsible for setting the group’s overall strategy and the NMT is responsible for driving it forward. Board of Baker Tilly UK Holdings as at 30 June 2014 Martin Rodgers Chairman Laurence Longe Managing Director of BTUK Holdings and National Managing Partner of BTUK Group Jane Bleach Head of Quality, Diversity and Partner Development David Gwilliam Chief Operating Officer Martin Laurence Elfed Jarvis Rodgers Longe Regional Managing Partner, South Nigel Tristem Finance Director
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