KPMG US has established an Independent Audit Quality Advisory Committee, along the lines of its fellow Big Four firms, in an effort to improve its audits amid tougher inspections and enforcement by the Public Company Accounting Oversight Board.
The new committee at the New York-based firm will include audit and accounting leaders with experience from the PCAOB, Securities and Exchange Commission, American Institute of CPAs, COSO (Committee of Sponsoring Organizations of the Treadway Commission) and the International Financial Reporting Standards Foundation.
The committee will offer an independent, informed perspective on matters related to audit quality, complementing the governance of the firm's board of directors, which includes three independent members.
"Our audit transformation has delivered incredibly positive results and empowered our auditors to deliver high quality audits during a time of compounding market risks," said KPMG US chair and CEO Paul Knopp in a statement Wednesday, "This committee will provide an informed and independent perspective as we continue to transform the audit to best protect the capital markets."
In 2019, KPMG began an initiative to drive significant continuous improvements in audit quality. The IAQAC will be responsible for advising KPMG on matters underpinning the firm's commitment to audit quality, including efforts to meet new quality standards from regulatory bodies and respond to PCAOB inspections, including root cause analysis, and the design, development, implementation and measurement of strategic audit quality initiatives.
In recent years, KPMG has deployed new data analytics and artificial intelligence capabilities to enable engagements to extract and analyze tens of thousands of transactions to refine the audit. The committee will advise on how the firm continues to deploy these Trusted AI capabilities into our audits.
The IAQAC operates in a strictly advisory capacity, and committee members have no voting, decision-making or similar rights.
Members of the IAQAC include:
- Zoe-Vonna Palmrose is the Accounting Circle professor emerita of accounting at the University of Southern California. Palmrose formerly served as deputy chief accountant for professional practice at the SEC, where she played a pivotal role as part of the SOX 404 Team. Palmrose also served as an SEC observer on the U.S. Department of the Treasury Advisory Committee on the Auditing Profession and on the PCAOB Standing Advisory Group.
- Doug Prawitt is the LeRay McAllister/Deloitte Foundation distinguished professor and director of the School of Accountancy at Brigham Young University. He is also the lead director on COSO's Executive Board and played a key role in producing COSO's ERM Framework, as well as its most recent Internal Control Integrated Framework. Prior to these roles, Prawitt served a three-year term as a member of the AICPA Auditing Standards Board.
- Larry A. Leva was most recently the vice chair of the board of trustees of the IFRS Foundation, where he oversaw the development of globally accepted accounting and sustainability disclosure standards. Prior to that role, he was the former KPMG global vice chairman for quality, risk and regulatory after serving in leadership roles at the U.S. firm, including on the firm's Management Committee, board of directors and as an SEC reviewing partner.
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