Accounting
New PwC assurance leader works to improve audits
Published
3 hours agoon
PricewaterhouseCoopers has been focusing on auditing under a new PwC US assurance leader, Deanna Byrne, who began the job in July.
Byrne is in her 36th year with PwC, starting as an intern. “I have been in the assurance practice my entire career, although I’ve had a number of different roles in different industry groups and leadership positions,” she told Accounting Today. “I feel like I’ve had nine jobs with one organization, which has been fantastic.”
Byrne is based in PwC’s Philadelphia office. Prior to taking on her new role she was the Philadelphia office managing partner and led the East region within PwC’s consumer and industrial products group.
“I’ve had a number of different responsibilities leading up to this tremendous opportunity, and I am absolutely thrilled to be able to step onto the leadership team as the assurance leader,” she said. “I’m really proud of PwC’s positioning in the industry, from a quality perspective. Quality is job one, and what I think about every day.”
In her current role, she is focusing on expanding PwC’s assurance offerings into areas like AI and sustainability. “There continue to be more needs outside of the financial statement audit for auditors, which I think is just great for the profession,” said Byrne.
The New York-based firm
“With Paul coming in as the new senior partner, we are now one single assurance line of service again, which I think is fantastic,” said Byrne. “It really is the way that we were structured for a number of years. We’re very accustomed to operating in this line, and we’re still working very closely with our tax and consulting colleagues. But we’re very comfortable with this structure. It allows us to go to market by sector. That’s primarily how we interact with our clients at the sector level, either insurance, banking or asset wealth management on the financial services side of the house, or consumer products, tech, as well as health industries and others on the products and services side.”
Overall, there are nine different industry sectors targeted by the current structure. “This structure allows us to really focus on having all of the assurance personnel together and driving our learning and development, our technology, which is all focused on ensuring continued audit quality, and how we continue to advance efficiencies and allow audits to become more efficient, less burdensome to our clients,” said Byrne. “We’re always trying to deliver more enhanced feedback to them on things that we’re seeing across the portfolios of those clients.”
PwC recently released its annual
“We’re really proud of that document,” said Byrne. “It underpins how we think about quality, and we want to be transparent with the marketplace on how we’re doing.”
The Public Company Accounting Oversight Board has been finding problems with the audits of some of the largest firms. During its inspections last year, the PCAOB saw some improvements, but audit deficiency rates still appear to be high, with an average of 46% of the engagements reviewed in 2023 having at least one deficiency significant enough to be included in Part I.A of the inspection report, excluding broker-dealer audit inspections, according to a
“I’m very proud of our profession-leading results as it relates to our compliance with our regulator,” said Byrne. “But at the same time, I think that’s one indicator of quality, and the audit quality report really gives a lot of broader data and information on how we’re thinking about quality. While we recognize and are proud of where we are, we also know that we can always do better. Continuous improvement has always been a core tenet at PwC, and that is one that I’m very focused on. We’re really looking at it as a result of the feedback we’ve gotten, not only from our external inspections, but also our internal inspections that we do ourselves.”
PwC has been improving its training in response to the findings. “We’re continuing to embed additional training and skills around new supervision and review,” said Byrne. “That was something coming out of our cycle we really wanted to try and enhance, so we enhanced some of our policies and rolled out some more training there. We believe what the regulator does is very important and we respect that. We want to make sure that we’re continuing to do everything we can do to have the best results possible.”
The PCAOB findings of audit deficiencies across so many large firms point to the need for improvements, even if the number of financial restatements isn’t as high. “I think there are a number of dimensions to think about,” said Byrne. “When you think about audit quality, obviously external inspections from the PCAOB are an important one, and we look at that as relative to how we’re doing and how we want to make changes to advance quality.”
PwC’s audit quality report found that 97% of the firm’s audit professionals reported that they receive consistent messages about the importance of audit quality from leadership.
“If you read the audit quality report, you can see a number of initiatives that we have to drive not just quality within the firm, but as we’re thinking about the profession, ways that we can continue to support advancing the profession,” said Byrne.
“When we think about what we’re delivering in the audit quality report, it’s not just the inspection findings and that type of thing, but it’s also how we are trying to continue to lead the profession in areas that will help benefit the entire profession,” she added.
With the Trump administration coming into the White House in January along with a new Republican-dominated Senate, there’s talk about the federal government placing less emphasis on regulation at the Securities and Exchange Commission and perhaps the PCAOB.
“From my perspective, quality is bipartisan, so we’re going to continue to do what we think is right to ensure that we’re delivering a high-quality audit, and we’ll make sure that we’re following the regulations that are in place,” said Byrne.
Attracting young people
Accounting firms like PwC have been facing hurdles in attracting more young people to enter the profession, especially when it comes to jobs like auditing.
“I’d love to say that the challenge doesn’t exist, because I believe it’s such a fantastic profession,” said Byrne. “But the numbers don’t lie. The number of students choosing accounting in the recent past has clearly declined, and in an effort to really combat that, what we want to be responsible for is being a voice to say, let us talk to you a little bit more about what the accounting profession can provide to you. Not everyone needs to continue to be a lifer at PwC, such as myself. It really does provide the language of business, and we look at our alumni that have moved on to be very successful in lots of different avenues within business and even outside of business, and they would tell you that the experience that they learned, and the value of the accounting degree, really helped them as they were moving on throughout their career.”
PwC has invested 140,000 hours in talking about the profession at high schools and college campuses to try to attract talented young people to join the profession.
“We’re committing a lot of hours to go to high schools and junior colleges to talk about the value of the profession, and what great opportunities are out there,” said Byrne.
The firm will be hosting
Byrne sees value in making the traditional 150-hour requirement more flexible for CPA candidates. “We are very supportive of alternatives to be able to to become a CPA,” she said. “Our biggest priority is really to ensure that mobility across the states is maintained. That’s really critical. We’re supportive of a lot of the different avenues that are being promoted right now to potentially get there. Anything we can do to open up the aperture for more students who want to come into the profession is really a good thing.”
Despite the need for more young people in the profession,
AI growth
Meanwhile, PwC has been ramping up its use of technology such as artificial intelligence and data analytics to automate its processes.
“It’s a huge focus for us in a few ways,” said Byrne. “We have a lot of components of our learning and development plan to upskill our people so that they become better digital citizens and can really implement new technology in the work that we’re doing for our clients.”
That means embedding next-generation technology into PwC”s audit platform. “We’re spending a lot of time and resources in that space,” said Byrne. “I’m really proud of our progress there, but there’s still a way to go. But then also in offerings that we’re providing to our clients, how do we help them with responsible AI to ensure that they have the right governance structure, and how can we help support in those areas? We’re really seeing it on both sides, and it will continue to be one of our top priorities as we move into the next few years.”
PwC recently announced a
PwC US has also been outsourcing some of its work abroad to other member firms in its global network. “We started probably greater than five years ago with acceleration centers overseas in various locations, and have continued to move portions of our work into those centers,” said Byrne. “We’ve also set up Centers of Excellence onshore in the U.S., where some of the more routine work areas will be performed in a Center of Excellence, as opposed to on the engagement team. That’s coordinated through the engagement team, but it may be done slightly differently. That model has continued to evolve over the years, and we’ll continue to look at what makes the most sense from the overall engagement perspective.”
Sustainability assurance
Meanwhile, PwC is seeing more demand for sustainability assurance services, especially in the European Union, where the Corporate Sustainability Reporting Directive will be taking effect for large companies. “Because the European regulations are now out and are becoming applicable for multinational clients, we are working with a number of our clients as they begin to assess their readiness for these standards,” said Byrne. “It depends on the size, but some of them will be required to have limited assurance or reasonable assurance over the next few years. We’ve continued to upscale our people so that they’re prepared and can really help our clients as they enter into this new era of reporting that they’re not familiar with. There are also some states in the U.S. that will potentially have new reporting for that as well, so we’re continuing to get our people ready for that, get our methodology and technology aligned, and be able to deliver that in the next year.”
California, for example, has
Over the next few years, Byrne expects to see more technology advances in the audit profession. “We’re working really hard there to make sure that we have the right balance of technology,” she said. “But we’re people led, and we’re continuing to ensure that judgments are made by our people, so we need to continue to recruit and retain the right amount of people. And also as sustainability and AI and other areas emerge where we believe that the market’s looking to us to continue to provide assurance in these areas, we’re going to continue to upskill and be prepared to deliver whatever the market ultimately requires or wants from a reporting perspective.”
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Accounting
IESBA chair Gabriela Figueiredo Dias reappointed
Published
9 minutes agoon
November 20, 2024Gabriela Figueiredo Dias, chair of the International Ethics Standards Board for Accountants, has been reappointed for a second term, beginning Jan. 1, 2025 and ending Dec. 31, 2026.
Figueiredo Dias has been leading the global ethics board since January 2022. During her first term, she spearheaded the IESBA through a strategy shift, including strategic initiatives that strengthened the relevance and widened the impact of the
She has also been leading development of new standards such as the soon-to-be-released
Other new standards finalized over her first term included standards addressing the ethical dimensions of
The reappointment comes at a significant time for the IESBA, as the board pursues a bold
“I am honored to continue to lead the important work we are advancing at IESBA in the public interest,” Figueiredo Dias said in a statement Wednesday. “In times when ethics matters increasingly for sustainable businesses, markets and economies, it is essential that our standards meet the highest public expectations. Ethics is not optional. It is the bedrock of the accountancy profession and of the public trust in the profession’s work. I look forward to progressing the ambitious agenda we have set, with the critical collaboration of our stakeholders, as we address the complex ethical challenges our world faces today.”
Before joining the IESBA, Figueiredo Dias served as chair of the Portuguese Securities Market Commission and was a board member of the International Organization of Securities Commissions and the European Securities and Markets Authority. She also served as vice-chair of the Organization for Economic Cooperation and Development’s Corporate Governance Committee.
Figueiredo Dias will be eligible for another term in 2027. “Under Gabriela’s leadership, the IESBA has tackled important projects over the past three years, which are in many instances groundbreaking and elevating the ethics agenda,” said Public Interest Oversight Board chair Linda de Beer in a statement. “The vital work on Sustainability and External Experts projects, coming to conclusion, being most pertinent. We are therefore glad to be able to renew Gabriela’s important leadership role as chair of the IESBA for a second term, in the first Standard Setting Board chair re-appointment process fully in the hands of the PIOB. We have done this in close consultation with the Monitoring Group Chair and other stakeholders who have a keen interest in the work of the IESBA. We wish Gabriela well for the term ahead, in continuing to steer the IESBA’s ambitious Strategy and Work Plan, which include the very important project on Firm Culture and Governance, central to the public interest.”
The Public Interest Oversight Board, which oversees IESBA and the International Auditing and Assurance Standards Board, also announced several other new appointments and re-appointments to the IESBA and the IAASB this week that will take effect in January.
The PIOB appointed Channa Wijesinghe, CEO of the Accounting Professional & Ethical Standards Board of Australia. as vice-chair of IESBA for a two-year term, following his re-appointment to the board. Nancy Miller, managing director of KPMG US, and Obichukwu Nwazota, managing consultant of UGN Consulting Services in Nigeria, were appointed as new IESBA members. Mark Babington, executive director of the U.K.’s Financial Reporting Council, and Christelle Martin, a former ENGIE senior executive in France, were re-appointed for three-year terms, and Richard Huesken, a consultant and recently retired global independence leader at EY US, for a final year of service.
For the IAASB, Josephine Jackson, director of international audit and assurance standards policy at the U.K.’s Financial Reporting Council, was re-appointed as IAASB vice-chair for a final year of service. Nancy Cheng, audit committee chair at Shared Services Canada; Amaro Gomes, audit committee member at Banco Bradesco; Xiaoyue Sun, partner at BDO China; and Mikiko Ono, director of sustainability disclosure regulations at Recruit Holdings in Japan were appointed as new IAASB members, and Bill Edge, former chair of Financial Reporting Council and Auditing and Assurance Standards Board of Australia, and Neil Morris, global head of ESG assurance and methodology at KPMG, South Africa. were re-appointed, all for three-year terms.
Accounting
Responsible AI in accounting: Addressing firms’ top 5 concerns
Published
1 hour agoon
November 20, 2024Generative artificial intelligence is making inroads into the accounting industry, promising to greatly increase efficiency and productivity while offering real-time, deep insights that help improve performance. As firms deal with labor shortages and expand their services amid elevated client expectations, they are avidly exploring AI’s possibilities.
AI doesn’t come without caveats, particularly for accounting firms that work with highly sensitive personal and financial information of their clients. Although Gen AI’s potential benefits are considerable, firms should proceed cautiously and understand its impact on business.
For all of its potential, AI may not immediately solve all of the industry’s challenges. As the initial excitement subsides, it’s critical that IT teams ensure that any AI initiatives align with the objectives of their stakeholders — including the firm itself, clients and regulatory bodies.
The steps to implementing responsible AI
Building a responsible AI strategy starts with a clear understanding of the specific problems or opportunities the firm aims to address with AI, coupled with a commitment to educating leadership and employees on what AI can and cannot achieve. This foundation ensures AI is implemented and used thoughtfully, with resources aligned to deliver maximum impact.
Accounting firms also need a strong data and analytics strategy to ensure their data is well-structured before implementing AI. Structured data is the backbone of responsible AI, enabling faster, more accurate insights and transforming data into a powerful decision-making tool. Without it, AI risks stumbling on inconsistencies and poor-quality data, leading to misguided outcomes and wasted resources. In short, well-structured data unlocks AI’s full potential.
Once these fundamentals are in place, firms can assess their current maturity and readiness for AI implementation. Using a
- Information strategy;
- Governance/resourcing;
- Technology/IT infrastructure;
- Level of automation; and.
- End-user capabilities.
By using the model, firms can identify their capability levels in each category, ranging from beginner to advanced. For example, in the area of information strategy, a firm with minimal IT and business alignment may be considered a beginner, whereas one with integrated alignment across IT, business and executive functions may be classified as more advanced.
Responsible AI will prioritize safety, transparency and trustworthiness. Firms need to strike a delicate balance between innovation and security, which first requires a thorough evaluation of data connectivity, curation, and confidentiality.
To properly incorporate responsible AI, there are five essential areas accounting firms should consider:
Protecting client privacy
Because safeguarding client information is the foundation of building trust with clients, privacy protections must be a top priority when accounting firms add solutions to their tech stack or develop new tools.
Firms can ensure they meet client expectations of confidentiality by practicing techniques like data minimization, ensuring firms handle the least amount of information required for a specific purpose. That can reduce the risk of data breaches, privacy violations and misuse.
Firms should also never share client information on public platforms like ChatGPT, which are vulnerable to cybersecurity threats that the firm has no control over.
Guarding against bias
An AI model trains by analyzing enormous volumes of data and applying what it learns to perform its tasks. Data scientists and developers need to be wary of the information they use to train and create AI algorithms. If biases exist in the training data, those biases will be replicated in the AI model’s work and generate unrelated or incorrect information.
For example, a model may be trained to scrutinize a particular account that has a history of misstatements while overlooking new accounts in the current year. Or it may apply a biased risk profile to particular groups of clients based on historical data rather than client-specific information. IT teams should scrutinize inputs and outputs regularly to detect biased results.
Promoting trust through transparency
AI’s performance should not be a mystery; the models used by accounting firms should be simple, auditable and explainable. Explainable AI methods and tools can show how AI arrives at its decisions, allowing humans to understand the outcomes or identify and address potential issues. Establishing this level of transparency will help foster and demonstrate trust and respect with customers, users, and stakeholders.
Enforcing accountability
Better transparency enables better accountability. A user or group of users — which can include developers, deployers and even end users — should be assigned to regularly monitor and audit the firm’s AI models. They should be able to explain the rationale behind the AI’s outputs and perform updates or make adjustments to correct issues or errors.
Redefining roles
The truth is that AI isn’t going to replace accountants, but it will redefine their roles. AI has the power to transform the way accountants work, freeing employees from mundane tasks to drive growth. Accountants need to grasp the power of pairing their expertise with AI and learn to work with it to improve performance and efficiency.
AI will need accountants to provide extensive monitoring and oversight. But by taking over a lot of routine tasks that accountants spend time on now, AI will allow them to focus on more complex high-level initiatives. In the process, AI will help alleviate the labor shortage and could improve firm retention.
Future-forward accounting firms can reap immense benefits from GenAI as they embark on their digital transformation journey. However, they need to ensure they protect privacy and security. Implementing AI within a capable knowledge work automation framework can, for example, help ensure that data remains confidential, stays within internal system boundaries and that employees have access only to the data they need.
Making sure AI models are trained on complete, bias-free data. Having accountants monitor AI’s outputs can maintain transparency and ensure efficient, effective use of the technology. AI is part of the path forward for the industry, but firms need to be sure they step carefully.
Accounting
TaxPlanIQ launches ROI Method of Value Pricing Calculator
Published
2 hours agoon
November 20, 2024Tax planning software provider
The solution features an ROI-centered pricing model that helps firms set fees based on the expected return on investment for clients, complexity of the implementation work and more. The calculator features a step-by-step approach to make it accessible to firms with little tax planning experience.
It is also intended to help firms better explain the value of their services and just what clients are paying for and why. Unlike a traditional hourly billing model, this method focuses on the financial impact and strategic value perceived by the client upfront. By using this calculator, practitioners can demonstrate the value of their services through analyzing the cost savings and income opportunities for the client. It aims to provide clients with a better understanding of their return on investment.
The method begins with an estimate of both cost savings and tax savings for the client. Then the practitioner can calculate a suggested price based on a desired ROI. Additional elements can be factored in such as the complexity, urgency or riskiness of the engagement, or other benefits such as concierge services or unlimited email support. Ultimately this produces an ROI report. The practitioner can walk clients through all the calculations in the report, propose a fee and then, if they agree, send them the engagement letter and invoice, and onboard them. The method allows for tiered pricing packages if the practitioner wants to include them.
These calculations are already done automatically in the TaxPlanIQ software, but the new
“We created the ROI Method of Value Pricing Excel Calculator to help firms set profitable, client-centered pricing for advisory services,” said Jackie Meyer, founder and president of TaxPlanIQ. “This tool allows firms to price with confidence and communicate value clearly.”
TaxPlanIQ was included in the AICPA & CIMA’s startup accelerator program
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