Transparency Report 2018 - EY Nigeria - Transparency Report 2019
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Transparency Report 2018 EY Nigeria
Contents
Message from the Country Managing Partner and the EY Nigeria Assurance Leader................3
About us..............................................................................................................................4
• Legal structure, ownership and governance........................................................................4
• Network arrangements......................................................................................................5
Commitment to quality.........................................................................................................7
• Infrastructure supporting quality........................................................................................7
• Instilled professional values...............................................................................................8
• Internal quality control system...........................................................................................9
• Client acceptance and continuance...................................................................................10
• Performance of audits.....................................................................................................11
• Review and consultation..................................................................................................12
• Audit partner rotation.....................................................................................................13
• Audit quality reviews.......................................................................................................13
• External quality assurance review.....................................................................................14
• Compliance with legal requirements.................................................................................14
Independence practices......................................................................................................16
Continuing education of audit professionals.........................................................................18
Revenue and remuneration.................................................................................................19
• Financial information......................................................................................................19
• Partner remuneration......................................................................................................19
Appendix 1.........................................................................................................................21
Appendix 2.........................................................................................................................22
More information about EY can be found at ey.com.
Message from the Country Managing Partner and the EY Nigeria Assurance Leader Henry Egbiki Jamiu Olakisan Managing Partner | EY Nigeria Assurance Leader | EY Nigeria Welcome to the 2018 Transparency Report of Ernst & Young (EY Nigeria). We believe that how we advance audit quality, manage risk and maintain our independence as auditors should be transparent to our stakeholders. We value regular dialogue, and this report is one of the ways in which we advise our stakeholders on what we are doing in each of these areas. Executing high-quality audits continues to be our top priority and is at the heart of our commitment to serve the public interest. It enables us to grow the global EY network successfully and responsibly, while achieving our purpose of building a better working world. Auditors play a vital role in the functioning of capital markets by promoting transparency and supporting investor confidence. Companies, regulators and other stakeholders count on us to deliver excellence in every engagement. We are focused on investing in tools to improve what we do, creating the highest-performing teams, and building trust and confidence in the audits we perform. EY Nigeria’s reputation is based on and grounded in providing high-quality professional audit services objectively and ethically to every company we audit. We continue to embrace the transparency objectives of the European Union’s 8th Company Law Directive, which requires Nigeria statutory auditors of public interest entities (PIEs) to publish annual transparency reports. The 2018 EY Nigeria Transparency Report complies with the Directive and covers the financial year ended 30 June 2018. In this report, you can learn more about our internal quality control system: how we instill professional values, how we perform an audit, our review and consultation processes, our approach to audit quality reviews, and our independence practices. EY Nigeria is focused on enhancing audit quality and upholding our independence, informed by several matters including external and internal inspection results. Continuous improvement of audit quality requires us to challenge approaches to audit execution, and we focus on this by evaluating all inspection findings and taking responsive actions. We encourage all our stakeholders — including our clients and their investors, audit committee members and regulators — to continue to engage with us on our strategy as well as any of the matters covered in this report. Henry Egbiki Jamiu Olakisan Managing Partner Assurance Leader EY Nigeria EY Nigeria EY’s purpose: building a better working world EY is committed to doing its part in building a better working world. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to stakeholders. In so doing, we play a critical role in building a better working world for our people, our clients and our communities.
About us
Legal structure, ownership and governance
Ernst & Young is a Partnership The Areas comprise a number of elected as Presiding Partner of the
organized in Nigeria and is a member Regions, which consist of member RPF also serves as the Region’s
firm of Ernst & Young Global Limited, firms or sections of those firms. representative on the Global
a UK company limited by guarantee Governance Council (see page 5).
EY Nigeria is part of the EMEIA Area,
(EYG). In this report, we refer to which comprises EYG member firms
ourselves as “EY Nigeria,” “we,” “us” in 98 countries in Europe, the Middle
or “our.” EY refers collectively to the East, India and Africa. Within the
global organization of the member EMEIA Area, there were 11 Regions,
firms of EYG. and from 1 July 2018 the number has
EY Nigeria is governed by an reduced to 10. EY Nigeria is part of
executive committee of partners the Africa Region (West cluster).
headed by the Managing Partner, Ernst & Young (EMEIA) Limited
Henry Egbiki. He is supported by the (“EMEIA Limited”), an English
other four service line leaders and the company limited by guarantee, is
COO who together provide leadership the principal coordinating entity for
to the four business lines: Advisory, the EYG member firms in the EMEIA
Assurance, Transaction Advisory and Area. EMEIA Limited facilitates the
Tax Services. coordination of these firms and
The firm has its head office in Lagos cooperation between them, but it
and other offices in Abuja and Port does not control them. EMEIA Limited
Harcourt. EY Nigeria has 24 partners, is a member firm of EYG, has no
15 directors (Executive and associate) financial operations and does not
and over 400 professional staff. provide any professional services.
EYG member firms are grouped into Each Region elects a Regional Partner
four geographic Areas: Americas; Forum (RPF), whose representatives
Asia-Pacific; Europe, Middle East, advise and act as a sounding board
India and Africa (EMEIA); and Japan. to Regional leadership. The partner
Transparency Report 2018: EY Nigeria 4
Network arrangements (1/2)
EY is a global leader in assurance, tax, among them. EYG does not provide operates on a Regional level within
transaction and advisory services. services, but its objectives include the Areas. This operating model
Worldwide, over 250,000 people the promotion of exceptional high- allows for greater stakeholder focus
in member firms in more than 150 quality client service by member firms in the 27 Regions, permitting member
countries share a commitment to worldwide. firms to build stronger relationships
building a better working world, with clients and others in each
Each member firm is a legally
united by shared values and an country, and be more responsive to
distinct entity. Their obligations and
unwavering commitment to quality, local needs.
responsibilities as members of EYG
integrity and professional skepticism.
are governed by the regulations of Global Governance Council
In today’s global market, the
EYG and various other agreements.
integrated EY approach is particularly The Global Governance Council
important in the delivery of high- The structure and principal bodies (GGC) is the main oversight body
quality multinational audits, which of the global organization during of EYG. It comprises one or more
can span nearly every country in the the year ended 30 June 2018 representatives from each Region,
world. are described below. They reflect other member firm partners as
the principle that EY, as a global at-large representatives and up to
This integrated approach enables
organization, has a common shared six independent non-executives
EY member firms to develop and
strategy. (INEs). The Regional representatives,
draw upon the range and depth of
who otherwise do not hold senior
experience required to perform such The Executive includes the Global
management roles, are elected by
diverse and complex audits. Executive (GE), its committees and
their RPFs for a three-year term,
teams, and the leadership of the four
EYG coordinates the member with provision for one successive
Areas. At the same time, the network
firms and promotes cooperation reappointment. The GGC advises
Transparency Report 2018: EY Nigeria 5
Network arrangements (2/2)
EYG on policies, strategies and the GE also approves appointments of This group brings together the
public interest aspects of its decision— Global Vice Chairs. The GGC ratifies members of the GE, GE committees,
making. The approval of the GGC is the appointments of any Global Vice Regional leaders and sector leaders.
required for a number of significant Chair who serves as a member of the The Global Practice Group seeks to
matters that could affect EY. GE. promote a common understanding
of EY’s strategic objectives and helps
Independent Non-Executives The GE’s responsibilities include the
drive consistency of execution across
promotion of global objectives and the
Up to six Independent Non-Executives the organization.
development, approval, and, where
(INEs) are appointed from outside
relevant, implementation of: EYG member firms
EY. The INEs are senior leaders from
both the public and private sectors, • Global strategies and plans Under the regulations of EYG,
and reflect diverse geographic and member firms commit themselves
• Common standards, methodologies
professional backgrounds. They to pursue EY’s objectives, such as
and policies to be promoted within
bring to the global organization, and the provision of high-quality service
member firms
the GGC, the significant benefit of worldwide. To that end, the member
their varied perspectives and depth • People initiatives, including criteria firms undertake the implementation
of knowledge. The INEs also form and processes for admission, of global strategies and plans, and
a majority of the Public Interest evaluation, development, reward work to maintain the prescribed scope
Sub-Committee of the GGC, which and retirement of partners of service capability. They are required
addresses public interest matters, to comply with common standards,
• Quality improvement and protection
including public interest aspects methodologies and policies, including
programs
of decision-making, issues raised those regarding audit methodology,
under whistleblowing policies • Proposals regarding regulatory quality and risk management,
and procedures, perspectives on matters and public policy independence, knowledge sharing,
stakeholder views and engagement human resources, and technology.
• Policies and guidance relating
in quality and risk management
to member firms’ service of Above all, EYG member firms
discussions. The INEs are nominated
international clients, business commit to conducting their
by a dedicated committee.
development, markets and professional practices in accordance
Global Executive branding with applicable professional and
ethical standards, and all applicable
The Global Executive (GE) brings • EY’s development funds and
requirements of law. This commitment
together EY’s leadership functions, investment priorities
to integrity and doing the right thing
services and geographies. It is chaired
• EYG’s annual financial reports and is underpinned by the EY Global Code
by the Chairman and CEO of EYG, and
budgets of Conduct and EY values (see page
includes its Global Managing Partners
• GGC recommendations 9).
of Client Service and Business
Enablement; the Area Managing The GE also has the power to mediate Besides adopting the regulations
Partners; the global functional and adjudicate disputes between of EYG, member firms enter into
leadership for Talent and Finance; member firms. several other agreements covering
the leaders of the global service aspects of their membership in the EY
lines — Assurance, Advisory, Tax and GE committees organization, such as the right and
Transaction Advisory Services; the Established by the GE and bringing obligation to use the EY name, and
Global Leader for Public Policy; and together representatives from the the sharing of knowledge.
one EYG member firm partner on four Areas, the GE committees Member firms are subject to reviews
rotation. are responsible for making that evaluate their adherence to EYG
The GE also includes the Chair of recommendations to the GE. requirements and policies governing
the Global Accounts Committee and In addition to the Global Audit issues such as independence,
the Chair of the Emerging Markets Committee, there are committees quality and risk management, audit
Committee, as well as a representative for Global Markets and Investments, methodology, and human resources.
from the Emerging Markets practices. Global Accounts, Emerging Markets, Member firms unable to meet the
Talent, Risk Management, Assurance, quality commitments and other EYG
The GE and the GGC approve Advisory, Tax, and Transaction membership requirements may be
nominations for the Chairman and Advisory Services. subject to separation from the EY
CEO of EYG, and ratify appointments
Global Practice Group organization.
of the Global Managing Partners. The
Transparency Report 2018: EY Nigeria 6
Commitment to quality (1/9)
Infrastructure supporting quality
Quality in our service lines Leader. This helps provide greater • Event-specific issues involving
assurance as to the objectivity areas of civil and political unrest;
Vision 2020+, which sets out EY’s
of audit quality and consultation or sovereign debt and related
purpose, ambition and strategy, calls
processes. accounting, auditing, reporting and
for EYG member firms to provide
disclosure implications
exceptional client service worldwide. The Global PPD also leads and
This is supported by an unwavering oversees the Global Professional • General engagement issues and
commitment to quality and service Practice group. This is a global how to work effectively with audit
that is professionally and globally network of technical subject matter committees
consistent, and means service that specialists in accounting and auditing Risk management
is based on objectivity, professional standards, who consult on accounting,
skepticism, and adherence to EY and auditing and financial reporting Responsibility for high-quality
professional standards. matters, and perform various practice service and ownership of the risks
monitoring and risk management associated with quality is placed with
EYG member firms and their service
activities. the member firms and their service
lines are accountable for delivering lines. Among other things, the Global
quality engagements. EY service lines The Global PPD oversees development Risk Management Leader helps
manage the overall process for quality of the EY Global Audit Methodology oversee the management of these
reviews of completed engagements (EY GAM) and related technologies risks by the member firms, as well as
and input for the quality of in- so that they are consistent with other risks across the organization as
process engagements, which helps relevant professional standards and part of the broader Enterprise Risk
achieve compliance with professional regulatory requirements. The Global Management framework.
standards and EY policies. Professional Practice group also
oversees the development of the Member firm partners are appointed
Vision 2020+ has reinforced
guidance, training and monitoring to lead risk management initiatives
the ownership of quality by the
programs and processes used by in both the service lines and member
service lines, including audit. It has
member firm professionals to execute firms, supported by other staff
also resulted in increased clarity
audits consistently and effectively. and professionals. The Global Risk
around the role of risk management
The Global, Area and Region PPDs, Management Leader is responsible
in policies and practices that support
together with other professionals who for establishing globally consistent
and improve audit quality.
work with them in each member firm, risk management execution
The Global Vice Chair of Assurance are knowledgeable about EY people, priorities and enterprise—wide risk
coordinates member firms’ clients and processes, and they are management. These priorities
compliance with EY policies and readily accessible for consultation cascade to member firms, and their
procedures for assurance services. with audit engagement teams. execution is monitored through
an Enterprise Risk Management
Professional Practice Additional resources often augment program.
The Global Vice Chair of Professional the Global Professional Practice
Practice, referred to as the Global group, including networks of
Professional Practice Director (PPD), professionals focused on:
is overseen by the Global Vice Chair • Internal—control reporting and
of Assurance and works to establish related aspects of the EY audit
global audit quality control policies methodology
and procedures. Each of the Area
PPDs is overseen by the Global PPD • Accounting, auditing and risk
issues for specific industries and
and the related Area Assurance
sectors
Transparency Report 2018: EY Nigeria 7Commitment to quality (2/9)
Global confidentiality policy Global Code of Conduct and their Each member firm that makes up
commitment to abide by them and our global structure is committed
Protecting confidential information
to participate in an annual security to providing high-quality audits.
is ingrained in the everyday activities
awareness learning activity. There are In 2015, we launched the SAQ
of EYG member firms. Respect for
various policies outlining the due care initiative throughout our Assurance
intellectual capital and all other
that must be taken with technology practices. SAQ establishes a
sensitive and restricted information
and data, including but not limited governance structure and is focused
is required by the EY Global Code of
to the Global Information Security on continuously improving our audit
Conduct, which provides a clear set
Policy, and a global policy around the process.
of principles to guide the behaviors
Acceptable Use of Technology. EY
expected of all EY people. The We use the word “sustainable” in
cybersecurity policies and processes
Global Confidentiality Policy further SAQ to demonstrate that this is not a
recognize the importance of timely
details this approach to protecting one-off, short-term initiative, but an
communication. EY people receive
information and reflects the ever- ongoing process of improvement. EY
regular and periodic communications
increasing use of restricted data. This has had a common audit methodology
reminding them of their
policy provides added clarity for EY for some time; now we have a
responsibilities around these policies
people and forms the fundamental common language and processes
and general security awareness
element of broader guidance that regarding audit quality.
practice.
includes key policies on conflicts of There are six components to SAQ:
interest, personal data privacy and Components of the audit quality tone at the top, strengthening
records retention. Other guidance control program people capabilities, simplification,
includes: In the following sections, we describe audit technology and digital,
• Social media guidance the principal components of the audit enablement and quality support, and
quality control program, which EY accountability. SAQ is implemented by
• Information—handling requirements
Nigeria follows: each member firm, and is coordinated
• Knowledge—sharing protocols and overseen globally.
• Instilled professional values
Cybersecurity Audit quality and the key elements
• Internal quality control system
Managing the risk of major and of SAQ are something every senior
complex cybersecurity attacks is • Client acceptance and continuance manager, manager and team member
a part of doing business for all • Performance of audits must understand and be committed to
organizations. While no systems implementing locally. SAQ is essential
• Review and consultation to all our goals and ambitions, and
are immune from the threat of
cyber—attacks, EY Nigeria is vigilant • Audit partner rotation each of the Regional and Area leaders
is held accountable for those goals.
in the steps taken to secure the • Audit quality reviews
environment of EYG member firms We have made significant progress
and to protect their clients’ data. • External quality—assurance reviews
through SAQ. EY’s internal and
The EY approach to cybersecurity • Compliance with legal requirements external inspection findings globally
is proactive and includes the are showing improvement, and we
implementation of technologies and Instilled professional values are producing greater consistency
processes necessary to manage and Sustainable Audit Quality in execution. We have deployed
minimize cybersecurity risks globally. world—class tools that enhance the
EY information security and data Quality is the foundation for
quality and value of our audits. Our
privacy programs, consistent with exceptional client service. It is what
ability to deliver consistency is based
industry practices and applicable legal we pride ourselves on. It is integral
in part on the use of EY Canvas,
requirements, are designed to protect to our work and central to our
our online audit platform. It better
against unauthorized disclosure of responsibility to provide confidence
supports audit execution, streamlines
data. There is a dedicated team of to the capital markets. Delivering
communications and enables us to
internal and external cybersecurity quality is at the heart of all we do and
provide a seamless audit.
specialists who actively monitor and supports our purpose of building a
defend EY systems. better working world for our people,
our clients and our communities. This
Beyond technical and process is reflected in the Sustainable Audit
controls, all EY people are required to Quality (SAQ) program, which is the
affirm in writing their understanding highest priority for our Assurance
of the principles contained in the EY practices.
Transparency Report 2018: EY Nigeria 8Commitment to quality (3/9)
We recently launched the EY Canvas The EY culture strongly supports When a report comes into the EY
Client Portal, which adds to the collaboration and places special Ethics Hotline, either by phone or
leading—edge tools already offered emphasis on the importance internet, it receives prompt attention.
to our auditors. In addition, we have of consultation in dealing with Depending on the content of the
deployed the 2018 Audit Milestones complex or subjective accounting, report, appropriate individuals from
Program globally, which establishes auditing, reporting, regulatory and Risk Management, Talent, Legal
the use of Milestones on selected independence matters. We believe or other functions are involved
PIE audits as one important step it is important to determine that to address the report. The same
to improving results and sustaining engagement teams and clients procedures are followed for matters
quality across engagements. correctly follow consultation advice, that are reported outside of the EY
and we emphasize this when Ethics Hotline.
There is also a network of Quality
necessary.
Enablement Leaders (QELs) across Our values: who we are
the practice and an overall Global The consistent stance of EY Nigeria People who demonstrate integrity,
Audit Quality Committee. has been that no client is more respect and teaming
They help us in executing and important than our professional People with energy, enthusiasm and
reviewing root-cause analysis and reputation -the reputation of EY the courage to lead
understanding the impact our Nigeria and reputation of each of
People who build relationship based
initiatives are having in driving quality our professionals
on doing the right thing
outcomes, better behaviours and a
continuous improvement mindset. Code of Conduct Internal quality control system
This infrastructure demonstrates We promote a culture of integrity Structure
that audit quality is the single most among our professionals. The EY
important factor in our decision— Global Code of Conduct provides a EY Nigeria’s reputation for providing
making and the key measure on which clear set of principles that guide our high-quality professional audit
our professional reputation stands. actions and our business conduct, and services independently, objectively
are to be followed by all EY personnel. and ethically is fundamental to our
Tone at the top
The EY Global Code of Conduct is success as independent auditors.
EY Nigeria leadership is responsible divided into five categories: We continue to invest in initiatives
for setting the right tone at the top to promote enhanced objectivity,
and demonstrating EY’s commitment • Working with one another independence and professional
to building a better working world • Working with clients and others skepticism. These are fundamental
through behavior and actions. While attributes of a high-quality audit.
the tone at the top is vital, our
• Acting with professional integrity
At EY Nigeria, our role as auditors
people also understand that quality • Maintaining our objectivity and
is to provide assurance on the
and professional responsibility independence
fair presentation of the financial
start with them. Our shared values, • Respecting intellectual capital statements of the companies we
which inspire our people and guide
Through our procedures to monitor audit. We bring together qualified
them to do the right thing, and our
compliance with the EY Global Code teams to provide our services,
commitment to quality are embedded
of Conduct, and through frequent drawing on our broad experience
in who we are and in everything
communications, we strive to create across industry sectors and services.
we do.
an environment that encourages all We continually strive to improve
The EY approach to business ethics personnel to act responsibly, including our quality and risk management
and integrity is contained in the reporting misconduct without fear of processes so that the quality of our
EY Global Code of Conduct and retaliation. service is at a consistently high level.
other policies, and is embedded
The EY Ethics Hotline provides our We recognize that in today’s
in the EY culture of consultation,
people, clients and others outside environment — characterized by
training programs and internal
of the organization with a means to continuing globalization and the rapid
communications. Senior management
confidentially report activity that movement of capital and the impact
regularly reinforces the importance of
may involve unethical or improper of technology changes — the quality
performing quality work, complying
behavior and that may be in violation of our audit services has never been
with professional standards, adhering
of professional standards or otherwise more important. As part of EY Vision
to our policies, leading by example
inconsistent with the EY Global Code 2020+, we continue to invest heavily
and through various communications.
of Conduct. The hotline is operated in developing and maintaining our
Also, EY’s quality review programs
by an external organization that audit methodology, tools and other
assess professional service as a key
provides confidential and, if desired, resources needed to support quality
metric in evaluating and rewarding all
anonymous hotline reporting services service.
professionals.
worldwide.
Transparency Report 2018: EY Nigeria 9Commitment to quality (4/9)
While the market and stakeholders to provide the basis for continual additional risk management
continue to demand high-quality improvement in audit quality, procedures for specific high-risk
audits, they also demand increasingly consistent with the highest standards factors.
efficient and effective delivery in the profession.
of audit services. In addition to The GE is responsible for
the investments mentioned, EY • Comply with legal, regulatory and
implementing quality improvement.
continues to seek ways to improve professional requirements
As such, it reviews the results of our
the effectiveness and efficiency of its In addition, the EY Global Conflicts
internal AQR program and external
audit methodology and processes, of Interest Policy defines global
audit firm regulatory reviews,
while improving audit quality. standards for addressing categories
as well as any key actions designed to
We work to understand where our address areas of potential conflicts of interest and
audit quality may not be up to our for improvement. a process for identifying them. It also
own expectations and those of includes provisions for managing
The recent results of such monitoring,
stakeholders, including external audit potential conflicts of interest as
together with the recent feedback
firm regulators. We seek to learn quickly and efficiently as possible
from independent external audit
from external and internal inspection through the use of appropriate
firm regulators, provide EY Nigeria
activities and to identify root causes safeguards. Such safeguards range
with a basis to conclude that our from obtaining a client’s consent
of adverse quality occurrences to internal control systems are designed
enable us continually to improve audit for EYG member firms to act for
appropriately and are operating
quality, and we believe that taking two or more clients to declining an
effectively.
effective and appropriate actions to engagement to avoid an identified
improve quality is important. Client acceptance and conflict.
continuance The EY Global Conflicts of Interest
Effectiveness of the quality control
system EY policy Policy and associated guidance were
updated in early 2015. The updates
EY has designed and implemented The EY Global Client Acceptance and
take into account the increasing
a comprehensive set of global audit Continuance Policy sets out principles
complexity of engagements and
quality control policies and practices. for member firms to determine
client relationships, and the need for
These policies and practices meet whether to accept a new client or a
speed and accuracy in responding to
the requirements of the International new engagement, or to continue with
clients. They also align with the latest
Standards on Quality Control issued an existing client or engagement.
International Ethics Standards Board
by the International Auditing and These principles are fundamental to
for Accountants (IESBA) standards.
Assurance Standards Board (IAASB). maintaining quality, managing risk,
EY Nigeria has adopted these protecting our people and meeting Putting policy into practice
global policies and procedures, regulatory requirements. The We use the EY Process for Acceptance
and has supplemented them as objectives of the policy are to: of Clients and Engagements
necessary to comply with local laws • Establish a rigorous process (PACE), an intranet—based system,
and professional guidelines, and to for evaluating risk and making for efficiently coordinating client
address specific business needs. decisions to accept or continue and engagement acceptance and
We also execute the EY Audit Quality clients or engagements continuance activities in line with
global, service line and member firm
Review (AQR) program to evaluate • Meet applicable independence
whether our system of audit quality policies. PACE takes users through
requirements
control has operated effectively so as the acceptance and continuance
• Identify and deal appropriately with requirements, and identifies the
to provide reasonable assurance that
any conflicts of interest policies and references to professional
our people comply with applicable
professional standards, internal • Identify and decline clients or standards needed to assess both
policies and regulatory requirements. engagements that pose excessive business opportunities and associated
risk risks.
The results of the AQR program and
external inspections are evaluated • Require consultation with
and communicated within EY Nigeria designated professionals to identify
Transparency Report 2018: EY Nigeria 10Commitment to quality (5/9)
As part of this process, we carefully to building trust and confidence in the section 225 of the International
consider the risk characteristics of a capital markets and in economies the Ethics Standards Board for
prospective client or engagement and world over. Accountants Code of Ethics (IESBA
the results of several due diligence Code), Responding to Non-Compliance
Audit methodology
procedures. Before we take on a new with Laws and Regulations and the
engagement or client, we determine EY GAM provides a global framework resulting conforming changes to the
whether we can commit sufficient for delivering high-quality audit ISAs. In addition, updated guidance
resources to deliver quality service, services through the consistent was issued on performing joint audits
especially in highly technical areas, application of thought processes, and audits when the entity uses a
and if the services the client wants judgments and procedures in all audit service organization, along with new
are appropriate for us to provide. engagements, regardless of size. policies relating to maintaining the
The approval process is rigorous, and EY GAM also requires compliance audit documentation in electronic
no new audit engagement may be with relevant ethical requirements, form. EY GAM was also enhanced by
accepted without the approval of our including independence from adding guidance to address common
PPD. the entity we audit. Making risk questions from audit teams and issues
assessments, reconsidering and arising from inspections.
In the EY annual client and modifying them as appropriate, and
engagement continuance process, In addition, we monitor current
using these assessments to determine
we review our service and ability to and emerging developments, and
the nature, timing and extent of
continue to provide quality service, issue timely audit planning and
audit procedures are fundamental
and confirm that clients share EY other reminders. These reminders
to EY GAM. The methodology also
Nigeria’s commitment to quality and emphasize areas noted during
emphasizes applying appropriate
transparency in financial reporting. inspections as well as other key
professional skepticism in the
The partner in charge of each topics of interest to our local audit
execution of audit procedures.
audit, together with our Assurance regulator(s) and the International
EY GAM is based on International
leadership, annually reviews our Forum of Independent Audit
Standards on Auditing (ISAs) and is
relationship with the audit client to Regulators (IFIAR).
supplemented in Nigeria to comply
determine whether continuance is with the local regulatory or statutory Technology
appropriate. requirements. Our audit engagement teams use
As a result of this review, certain Using an online tool, EY Atlas, an EY technology to assist in executing and
audit engagements are identified auditor is presented with a version documenting the work performed in
as requiring additional oversight of EY GAM organized by topic and accordance with EY GAM.
procedures during the audit (close designed to focus the audit strategy
monitoring), and some audit clients EY Canvas, our global audit platform,
on the financial statement risks,
are discontinued. As with the client lies at the heart of the audit and
and the design and execution of
acceptance process, our Regional and/ enables us to provide a high-quality
the appropriate audit response to
or cluster PPD is involved in the client audit. EY Canvas is built using HTML5,
those risks. EY GAM consists of two
continuance process and must agree state-of-the-art technology for web
key components: requirements and
with the continuance decisions. applications. This allows us to provide
guidance, and supporting forms data security and to evolve our
Decisions about acceptance and examples. The requirements software to respond to changes in the
or continuance of clients and and guidance reflect both auditing accounting profession and regulatory
engagements consider the standards and EY policies. The forms environment. The predecessor
engagement team’s assessment and examples include leading practice audit support tool, GAMx, was
of whether the company’s illustrations, and assist in performing decommissioned in 2018.
management may pressure us to and documenting audit procedures.
accept inappropriate accounting, Through the use of profile questions,
EY GAM can be “profiled” or tailored
auditing and reporting conclusions audit engagements in EY Canvas
to present the relevant requirements
to undermine quality. Considerations are automatically configured with
and guidance, depending on the
and conclusions on the integrity of information relevant to an entity’s
nature of the entity being audited. For
management are essential listing requirements and industry.
example, there are profiles for listed
to acceptance and continuance This helps to keep our audit plans
entities and for those considered
decisions. customized and up-to-date, and
non-complex entities. Enhancements provides direct linkage to our audit
Performance of audits to the audit methodology are made guidance, professional standards and
regularly to address new standards,
As part of EY Vision 2020+, EY has documentation templates. EY Canvas
emerging auditing issues and matters,
invested significantly in improving is built with a user interface that
implementation experiences, and
audit methodologies and tools, with allows the team to visualize risks and
the goal of performing the highest- external and internal inspection their relationship to the planned
results. In 2017, EY GAM was updated
quality audits in the profession. This
to address the requirements of new
investment reflects EY’s commitment
Transparency Report 2018: EY Nigeria 11Commitment to quality (6/9)
response and work performed in key EY Atlas is a global technology whole, and the related accounting
areas. It also enables a linkage for our platform that enables our auditors and financial statement presentation.
group audit teams to communicate to access the latest accounting and A tax professional reviews the
inter-office risks and instructions so auditing content, including external significant tax and other relevant
that the primary audit team can direct standards, EY interpretations and working papers. For listed and certain
execution and monitor performance thought leadership. other companies, an engagement
of the group audit. quality reviewer (described
Formation of audit engagement
below) reviews important areas
EY Canvas includes a Client Portal to teams
of accounting, financial reporting
assist teams in communicating with EY Nigeria policies require an annual and audit execution, as well as the
clients and streamlining their client review of partner assignments financial statements of the company
requests. Mobile applications are by our Assurance leadership and we audit and our auditor’s report.
integrated with EY Canvas to help Nigeria PPD to make sure that the
our people in their audit work; for The nature, timing and extent of the
professionals leading listed-company
example, in monitoring the status of reviews of audit work depend on many
audits possess the appropriate
the audit, capturing audit evidence factors, including:
competencies (i.e., the knowledge,
securely and performing inventory skills and abilities) to fulfill their • The risk, materiality, subjectivity
observations. engagement responsibilities, and are and complexity of the subject
Audit engagement teams use other in compliance with applicable auditor matter
software applications, forms and rotation regulations. • The ability and experience of the
templates during various phases The assignment of professionals to audit team members preparing the
of an audit to assist in executing an audit engagement is also made audit documentation
procedures, making and documenting under the direction of our Assurance
audit conclusions, and performing • The level of the reviewer’s direct
leadership. Factors considered
analysis. participation in the audit work
when assigning people to audit
At EY, we are making data analysis teams include engagement size and • The extent of consultation
integral to our audits. Our use of data complexity, specialized industry employed
and analysis is not about additive knowledge and experience, timing of Our policies also describe the roles
procedures or visualizations. It is work, continuity, and opportunities for and responsibilities of each audit
about taking large populations of on-the-job training. For more complex engagement team member for
company data, and applying our engagements, consideration is given managing, directing and supervising
globally consistent technology (EY to whether specialized or additional the audit, as well as the requirements
Helix) and methodology (EY GAM) to expertise is needed to supplement or for documenting their work and
audit that data. enhance the audit engagement team. conclusions.
EY Helix is a library of data analyzers In many situations, internal specialists Consultation requirements
for use in audits. These data analyzers are assigned as part of the audit
are transforming the audit through engagement team to assist in EY consultation policies are built upon
the analysis of larger populations performing audit procedures and a culture of collaboration, whereby
of audit-relevant data, identifying obtaining appropriate audit evidence. audit professionals are encouraged
unseen patterns and trends in that These professionals are used in to share perspectives on complex
data, and helping to direct our audit situations requiring special skills accounting, auditing and reporting
efforts. The use of data analytics or knowledge, such as information issues. Consultation requirements
also allows us to obtain better systems, asset valuation and actuarial and related policies are designed
perspectives, richer insights and a analysis. to involve the right resources so
deeper understanding of transactions that audit teams reach appropriate
and areas of risk. Review and consultation conclusions.
EY is deploying data analyzers to Reviews of audit work Consultation is built into the decision-
analyze the business operating cycles EY policies describe the requirements making process; it is not just a
of the companies that we audit, for timely and direct senior process to provide advice.
supported by analytics-based audit professional participation, as well
programs to aid the application of For complex and sensitive
as the level of review required for
these data analyzers. matters, we have a formal process
the work performed. Supervisory
requiring consultation outside of
Using the EY Helix library of data members of an audit engagement
the audit engagement team with
analyzers, our engagement teams can team perform a detailed review of the
other personnel who have more
enhance their audit risk assessment, audit documentation for accuracy and
experience or specialized knowledge,
enabling the audit of higher-risk completeness. Senior audit executives
primarily Professional Practice and
transactions, and assisting our people and engagement partners perform
Independence personnel. In the
in asking better questions about audit a second-level review to determine
interests of
findings and evaluating the outcomes. adequacy of the audit work as a
Transparency Report 2018: EY Nigeria 12Commitment to quality (7/9)
objectivity and professional of an audit engagement team to is less restrictive than the IESBA
skepticism, our policies require raise any disagreements relating to requirements, the EY Global
members of Professional Practice, significant accounting, auditing or Independence Policy requires the
Independence and certain others reporting matters. lead engagement partner and the
to withdraw from a consultation engagement quality reviewer to
These policies are made clear to
if they currently serve, or have be rotated after seven years. For
people as they join EY, and we
recently served, the client to which a new PIE (including a newly listed
continue to promote a culture that
the consultation relates. In this company) client, the lead engagement
reinforces a person’s responsibility
circumstance, other appropriate partner and the engagement quality
and authority to make their own views
individuals would be assigned. reviewer may remain in place for an
heard, and seek out the views of
additional two years before rotating
EY policies also require that we others.
off the team, if they have served the
document all consultations, including Differences of professional opinion client for six or more years prior to
written concurrence from the person that arise during an audit are the listing. Following rotation, the
or persons consulted, in order to generally resolved at the audit partner may not resume the lead or
demonstrate their understanding of engagement team level. However, if engagement quality review role until
the matter and its resolution. any person involved in the discussion at least two years
Engagement quality reviews of an issue is not satisfied with the have elapsed.
decision, they refer it to the next
Engagement quality reviews are We employ tools to track partner
level of authority until agreement is
performed by audit partners in rotation that enable effective
reached or a final decision is made.
compliance with professional monitoring of compliance with
standards for audits of all listed Furthermore, if the engagement requirements.
companies and those considered quality reviewer makes We have also implemented a process
close monitoring. Engagement recommendations that the for partner rotation planning and
quality reviewers are experienced engagement partner does not accept decision-making that involves
professionals with significant or the matter is not resolved to the consultation with, and approvals
subject matter knowledge. They are reviewer’s satisfaction, the auditor’s by, our Professional Practice and
independent of the engagement report is not issued until the matter Independence professionals.
team and able to provide objective is resolved. EY policies require
evaluation of significant accounting, documentation of disagreements and Audit quality reviews
auditing and reporting matters. In no their resolution. The EY Global AQR program is the
circumstances may the responsibility cornerstone of the EY process to
of the engagement quality reviewer Audit partner rotation
monitor audit quality. EY Nigeria
be delegated to another individual. EY supports mandatory audit partner executes the Global AQR program,
The engagement quality review rotation to help reinforce auditor reports results and develops
spans the entire engagement cycle, independence. EY Nigeria complies responsive actions plans. The primary
including planning, risk assessment, with the audit partner rotation goal of the program is to determine
audit strategy and execution. requirements of the code of the whether systems of quality controls,
Policies and procedures for the IESBA, the Securities and Exchange including those of EY Nigeria, are
performance and documentation of Commission of Nigeria, and the appropriately designed and followed
engagement quality reviews provide Financial Reporting Council of Nigeria, in the execution of audit engagements
specific guidelines on the nature, , as well as the U.S. Securities and to provide reasonable assurance
timing and extent of the procedures Exchange Commission (SEC), where of compliance with policies and
to be performed, and the required required. EY Nigeria supports audit procedures, professional standards,
documentation evidencing their partner rotation because it provides and regulatory requirements. The
completion. Our Regional and Cluster a fresh perspective and promotes Global AQR program complies with
PPD approves all engagement quality independence from company guidelines in the International
review assignments. management, while retaining Standard on Quality Control No. 1
expertise and knowledge of the (ISQC No. 1), as amended, and is
Audit engagement team resolution business. Audit partner rotation, supplemented where necessary to
process for differences of combined with independence comply with Nigeria professional
professional opinion requirements, enhanced systems standards and regulatory
EY has a collaborative culture that of internal quality controls and requirements. It also aids EY
encourages and expects people to independent audit oversight, Nigeria’s continual efforts to identify
speak up, without fear of reprisal, if helps strengthen independence areas where we can improve our
a difference of professional opinion and objectivity, and are important performance or enhance our policies
arises or if they are uncomfortable safeguards of audit quality. and procedures.
about a matter relating to a client For PIEs where rotation of the
engagement. Policies and procedures audit partner is not mandated by
are designed to empower members local independence regulation or
Transparency Report 2018: EY Nigeria 13Commitment to quality (8/9)
Executed annually, the program reviewed. other stakeholders.
is coordinated and monitored by The results of the Global AQR Compliance with legal
representatives of the Global PPD program, external practice monitoring
network, with oversight by Global and inspection activities are evaluated requirements
Assurance leadership. and communicated to improve The EY Global Code of Conduct
The engagements reviewed each year quality. Any quality improvement provides a clear set of standards
are selected on a risk-based approach, plans describe the follow-up actions that guide our actions and business
emphasizing audit engagements that to be taken, the people responsible, conduct.
are large, complex or of significant the timetable and deadlines, and EY Nigeria complies with applicable
public interest. The Global AQR sign-off on completed actions. laws and regulations, and EY’s
program includes detailed risk- Measures to resolve audit quality values underpin our commitment to
focused file reviews covering a large matters noted from the Global AQR doing the right thing. This important
sample of listed and non-listed audit program, regulatory inspections commitment is supported by a
engagements to measure compliance and peer reviews are addressed number of policies and procedures,
with internal policies and procedures, by Assurance leadership and our explained in the paragraphs below.
EY GAM requirements, and relevant PPD. The actions are monitored by
Anti-bribery
local professional standards and our PPD and Assurance leadership.
regulatory requirements. It also These programs provide important The EY Global Anti-bribery Policy
includes reviews of a sample of practice monitoring feedback for provides EY people with direction
non-audit engagements. These our continuing quality improvement around certain unethical and illegal
measure compliance with the efforts. activities. It emphasizes the obligation
relevant professional standards and to comply with anti-bribery laws and
internal policies and procedures External quality assurance provides greater definition of what
that should be applied in executing review constitutes bribery. It also identifies
non-audit services. In addition, reporting responsibilities when
EY Nigeria’s audit practice is subject
practice-level reviews are performed bribery is discovered. In recognition
to periodic inspection by the Financial
to assess compliance with quality of the growing global impact of
reporting Council, UK. As part of its
control policies and procedures in bribery and corruption, efforts have
inspections, the FRC evaluates quality
the functional areas set out in ISQC been increased to embed anti-bribery
control systems and reviews selected
No. 1. The Global AQR program measures across EY.
engagements.
complements external practice
monitoring and inspection activities, The last quality assurance inspection
such as inspection programs executed by FRC took place in 2015. The
by audit regulators and external peer final report on the inspection was
reviews. issued on 19 February 2016. The
FRC commenced another review in
AQR reviewers and team leaders
October 2018.
are selected for their skills and
professional competence in We respect and benefit from the FRC
accounting and auditing, as well inspection process. We thoroughly
as their industry specialization; evaluate points raised during the
they often work in the Global AQR inspection in order to identify areas
program for a number of years and where we can improve audit quality.
are highly skilled in the execution Together with the AQR process,
of the program. Team leaders and external inspections aid us in making
reviewers are assigned to inspections our audits and related control
outside of their home location and processes of the highest quality in the
are independent of the audit teams interests of our clients’ investors and
Transparency Report 2018: EY Nigeria 14Commitment to quality (9/9)
Insider trading Data privacy Document retention
The EY Global Insider Trading Policy The EY Global Personal Data Privacy EY Nigeria’s record retention policy
reaffirms the obligation of our people Policy sets out the principles to be applies to all engagements and
not to trade in securities with insider applied to the use and protection of personnel. This policy addresses
information, provides detail on what personal data, including that relating document preservation whenever any
constitutes insider information and to current, past and prospective person becomes aware of any actual
identifies with whom our people personnel, clients, suppliers, and or reasonably anticipated claim,
should consult if they have questions business associates. This policy litigation, investigation, subpoena
regarding their responsibilities. is consistent with applicable laws or other government proceeding
and regulations concerning data involving us or one of our clients
Trade sanctions
protection and privacy for maintaining that may relate to our work. It also
It is important that we are aware and processing personal data. addresses Nigeria legal requirements
of the ever—changing situation Furthermore, we have a policy to applicable to the creation and
with respect to international trade address our specific Nigeria data maintenance of working papers
sanctions. EY monitors sanctions privacy requirements and business relevant to the work performed.
issued in multiple geographies and needs.
provides guidance to EY people on
impacted activities.
Transparency Report 2018: EY Nigeria 15You can also read
