Transparency Report 2017 - EY FILE/FY17-Transparency-Report- آ  The 2017 EY Sweden Transparency Report

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  • Transparency Report 2017

    EY Sweden

  • Transparency Report 2017: EY Sweden 2

    Contents Message from the Chief Executive Officer ....................................................................................................................... 3

    About us ...................................................................................................................................................................... 5

    Legal structure, ownership and governance ................................................................................................................. 5

    Network arrangements .............................................................................................................................................. 6

    Commitment to quality .................................................................................................................................................. 8

    Infrastructure supporting quality................................................................................................................................. 8

    Instilled professional values ........................................................................................................................................ 9

    Internal quality control system .................................................................................................................................. 10

    Client acceptance and continuance ............................................................................................................................ 11

    Performance of audits ............................................................................................................................................. 11

    Review and consultation .......................................................................................................................................... 13

    Audit partner rotation .............................................................................................................................................. 14

    Audit quality reviews ............................................................................................................................................... 14

    External quality assurance review ............................................................................................................................. 15

    Compliance with legal requirements .......................................................................................................................... 15

    Independence practices ............................................................................................................................................... 16

    Continuing education of audit professionals .................................................................................................................. 18

    Revenue and remuneration .......................................................................................................................................... 19

    Financial information ............................................................................................................................................... 19

    Partner remuneration .............................................................................................................................................. 19

    Declaration from the Board of Directors ....................................................................................................................... 21

    Appendix 1 ................................................................................................................................................................. 22

    Appendix 2 ................................................................................................................................................................. 24

    More information about EY can be found at ey.com.

  • Transparency Report 2017: EY Sweden 3

    Message from the Chief Executive Officer

    Welcome to the 2017 Transparency Report of Ernst & Young AB (EY Sweden). We appreciate that our stakeholders want to understand how we advance audit quality, manage risk and maintain our independence as auditors. Regular dialogue is important to us, 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 Sweden’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 and Article 13 of the Regulation (EU) 537/2014 of the European Parliament and of the Counsel of 16 April 2014 which require Sweden’s statutory auditors of public interest entities (PIEs) to publish annual transparency reports.

    The 2017 EY Sweden Transparency Report complies with the directive, and covers the fiscal year ending June 30, 2017. 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 Sweden 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.

    EY Sweden is an integral part of our global Sustainable Audit Quality (“SAQ”) effort to support the highest quality audits as described in more detail on page 10. The six focus areas of SAQ are; tone at the top, people; simplification; transformation and innovation; enablement; quality support and monitoring; and accountability. The enhanced Global Audit Methodology (EY GAM), our new documentation tool (EY Canvas), upgrading of data analytics tools, augmented forms and templates and increased training all form part of the SAQ effort and were introduced two years ago. Even if it is early days we note some general improvements in the outcome from external and internal inspection results over time. Our Sustainable Audit Quality commitment is the way we work on a daily basis to learn, develop and achieve high-quality audit services.

    The EU audit reform has during 2016/2017 been in force for the first time. The reform includes legal definitions of Public Interest Entities, new audit reporting requirements, reinforcement of auditors independence and objectivity, mandatory firm rotation rules, non-audit services (NAS ) restrictions, increased interaction with the audit committees and also regulations for the PIE audit committees.

    Sweden opted to implement the mandatory firm rotation requirements of the EU Audit Regulation as follows:

  • Transparency Report 2017: EY Sweden 4

    • For PIEs with securities traded on a regulated market the maximum audit firm retention period is ten years plus an additional ten years if a tender process results in a decision by the shareholders to retain the auditor or 14 years if the tender process results in a decision to simultaneously engage an additional statutory auditor or audit firm.

    • For PIEs within the financial sector the audit firm retention period is limited to ten years. No extension is allowed.

    At EY Sweden, we were subject to a joint inspection by the US Public Companies Accounting Oversight Board (“PCAOB”) and the Swedish Inspectorate of Auditors (Revisorsinspektionen, “RI”) during spring last year. The PCAOB issued their report on December 15, 2016 which was published during the first half of 2017. The RI issued and published their report at the end of January, 2017. We were also subject to an inspection performed by the Institute of Public Accountants (FAR) of private entities on behalf of the RI. The FAR’s report is not publicly available. We are pleased with the results from the inspections and will continue to embrace the issues raised as elements of our continuous effort to maintain and improve audit quality.

    We continue to contribute to the development of audit quality via the FAR. FAR assumes an important role in informing the market of the development in the profession and in the work for improving efficiency and quality of the auditors work. EY Sweden is represented in FAR’s three policy groups (assurance, accounting and ethics) and other working groups at FAR also this year. The Interaction with the RI, our regulator, has increased during the year. For example we have participated in several seminars held by our audit regulator and met them to discuss the developments in our profession.

    EY is the only Big 4 audit firm which has developed a truly integrated Nordic organization, w

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