Ernst & Young Promotes its Quality Control Safeguards
In a newly-released brochure entitled, Maintaining Your Trust, Ernst & Young (E&Y) publicly explains how it maintains its focus on high quality audits.
Reasons Why E&Y Deserves Continued Confidence
The brochure describes the firm’s efforts and achievements in the following areas:
- Tone from the top and culture that strongly supports collaboration and consultation
- Higher-than-required standards for independence, (the "strictest in the profession")
- Risk-based audit methodology, technology and knowledge enablers
- Firmwide audit effectiveness training
- Independent national professional practice function
- Review of partner assignments
- Concurring reviews and required consultations
- Audit team disagreement resolution process
- Partner rotation and performance-based partner evaluation and compensation methods
- Audit quality review programs
- Client acceptance and continuance criteria
- Communication technology and knowledge databases
While some of these features are not unique to E&Y, the firm is believed to be the first to have come forward with such a convincing presentation of its strengths. Audits have always been notoriously difficult to explain, but this brochure may convince even the most skeptical clients that an audit is not a commodity after all.
A Way To Avoid Chairman Turley’s Worst Nightmare
With any luck, E&Y’s brochure will also help drive out the demons in its CEO’s worst nightmare.
"A client recently asked me what I thought to be the worst possible outcome of the current situation," says E&Y Chairman and CEO Jim Turley. "I told him it would be the implosion of Arthur Andersen… coupled with legislation by Congress that unduly restricted the profession… Add to this the imposition of too many requirements on audit committees," says Mr. Turley, "and we could end up with nobody wanting to do audits and nobody wanting to serve on audit committees."
Mr. Turley says he is optimistic that legislators and accounting firms will take the right steps to ensure a stronger profession, better financial reporting and stronger capital markets. He made the same remarks in an article in the Wall Street Journal, but those remarks were sandwiched between some rather distracting headlines. The same statement seems infinitely more credible and persuasive when placed in the front of a brochure packed with a long list of reasons to have confidence in his leadership and the future of the profession.