PwC reports on its latest audit quality efforts

PricewaterhouseCoopers issued its 2021 audit quality report Monday, pointing to progress that the Big Four firm has been making on auditor independence, along with issues such as diversity and inclusion.

PwC reported that 98% of its assurance professionals received consistent messaging on the importance of audit quality, and 97% understand the firm’s audit quality objectives. The Public Company Accounting Oversight Board inspected 58 of PwC’s audits in the most recent inspection cycle, and the firm anticipates that only one of the audits will be singled out in Part 1.A of the report, which spotlights significant deficiencies. In the most recent PCAOB report for 2019 inspections, 18 audits out of 60 inspected were included in Part 1.A (see story).

PwC also pointed to a 96% compliance rate of issuer audit engagements selected for internal inspection by the firm. The number of issuer audit engagements selected for internal inspection was also 96. Audit partners’ average years of experience at PwC is 23 years.

The report comes at a time when large audit firms have come under fire for lapses in quality. In response, PwC has begun offering regular reports on its progress on audit quality, issuing an updated report earlier this year in January (see story).

PwC has also been contending with the other challenges brought by the pandemic over the past year and a half, which has forced many auditing firms to operate remotely.

“It’s been well over a year since the onset of the COVID-19 pandemic,” said PwC U.S. trust solutions co-leader Wes Bricker in a video accompanying the report. “We’re pleased with how, in an unprecedented circumstance, our audit teams have continued to deliver and to meet the needs of our clients and of our stakeholders. The pandemic highlighted for us just how vital the forward-thinking aspects of our strategy are to the continued success of our people and of our firm.”

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The firm has also been making efforts to increase diversity, equity and inclusion under U.S. chairman and senior partner Tim Ryan. The percentage of women partners is 24% while the percentage of racially and ethnically diverse partners is 17%. In terms of employees, 49% are women and 36% are racially and ethnically diverse. The report also noted that PwC has become increasingly focused on environmental, social and governance reporting, working with other organizations and regulators to develop or improve ESG-related metrics and disclosures.