Transparency report - PwC · 2015. 10. 2. · PwC Thailand/ Transparency report 7 You should have peace of mind every time you work with PwC. This happens when you know we’ll meet

www.pwc.com/th

Transparency report

A conversation on transparency, quality, and value

PwC Thailand

August 2015

Our report at a glance

A worldwide mobility programme helps broaden our staff’s experiences and capabilities.

Where our people are:

80 hours

Each year, our staff receive 80 hours of training.

The Assurance practice had

63,000 training hours

80%80% of graduate applicants accept their offer to work with PwC, resulting in 220 recruits last year.

Our people

100%We interviewed 19

clients and all of them said they would use

PwC services for similar work in the future

2010 and 2012 – There were nocomments of findings issued by the US Public Company Accounting Oversight Board in connection with the 2010 and 2012 inspections.

2014 – The Securities and Exchange Commission Thailand rated our quality control system as ‘Good’. We also achieved full compliance with all requirements of Network Risk Management Standards over the past 5 years.

Our quality

2015 – We didn’t receive any comments or findings from the US Public Company Accounting Oversight Board during their inspection.

Our approach

Client acceptance & independence

Deep business understanding

Relevant risksIntelligent scoping

Robust Testing

Meaningful conclusions

1 2 3 4 5 6

The overall PwC audit framework provides a holistic approach to make sure we conduct quality audits:

On average, our staff has

3.4 years of

experiences

Global people survey (GPS)

GPS is our annual people engagement survey.

94%

This year’s response rate was

The areas we received favourable scores from our people are:

Commitment to our firm

Satisfaction Advocacy Pride

Contents

1. Introduction 6

1.1 Letters from our management 6

2. PwC Thailand and our Assurance practice 8

2.1 PwC Network 9

2.2 Leadership structure 9

2.3 Quality support team 11

2.4 Our work with the community 13

3. Quality people 14

3.1 PwC Professionals – The network’s leadership framework

15

3.2 Getting the right people for our team 15

3.3 Learning and Development 16

3.4 Talent management 17

3.5 Performance evaluation 18

3.6 Global people survey 18

4. Quality service 20

4.1 Our commitment to quality 21

4.2 Our compliance with ISQC1 23

4.3 PwC audit approach 24

4.4 Supporting tools and technology 24

4.5 Integrity, objectivity and ethical requirement 26

4.6 Client and engagement acceptance process 29

4.7 Partner remuneration 29

5. Monitoring of quality 30

5.1 Our monitoring programme 31

5.2 Our commitment to continuous improvement 32

6. Our plan for the future 34

Table of Figures

Figure 1: PwC Thailand leadership structure 10

Figure 2: Assurance Staff/Partner-manager ration 11

Figure 3: PwC client satisfaction survey 2015 12

Figure 4: PwC Professional framework 15

Figure 5: PwC Assurance recruitment process overview 15

Figure 6: PwC 70-20-10 framework 16

Figure 7: Audit quality indicators 21

Figure 8: ISQC1 components 22

Figure 9: PwC Global audit approach 24

Figure 10: Audit tools – available 25

Figure 11: Audit tools – coming up soon 26

Figure 12: PwC Global Independence Policy (GIP) 27

Figure 13: PwC Independence - core areas 28

Figure 14: PwC Monitoring programme 31

Figure 15: Our quality improvement initiatives 33

PwC Thailand/ Transparency report

6

Introduction

1.1 Letters from our management

Why do we need to talk about transparency and value?

I’d like to welcome you to our first transparency report. In this report, we share what we’re doing and what we plan to do to build on the trust and confidence our clients already have in our audit services. We also outline our commitment to create even more value by innovating the way we work to enhance the efficiency and effectiveness throughout the audit process.

We expect the role of auditors to change in response to the currently turbulent global financial environment and to the new audit reports recently released by the International Auditing and Assurance Standards Board (IAASB). Rules and regulations will become more stringent, technology will continue to move forward, and stakeholders will look for more informative financial reporting.

With increasing demands and expectations on auditors as a result of the economic downturn, we’re actively participating in the global conversation with international bodies that govern and establish accounting standards, regulators, and other audit professionals about how to reinvigorate the audit process and audit reports to create more value. We’re also working with our network of firms and global partners to find ways to increase confidence in the market through financial reporting and providing companies and audit committees value and relevance for audits. In the meantime, we continue to focus on compliance with professional ethical requirements and encourage professional scepticism throughout an audit.

I’m proud of the work our people have done, and I look forward to PwC’s continued relationship with you.

Sira Intarakumthornchai

PwC Thailand CEO


7

You should have peace of mind every time you work with PwC. This happens when you know we’ll meet your expectations and understand your business needs.

Our quality is a result of our flexible approach, our people’s talent that is strengthened by our rigorous training processes, and the support we give our team throughout an audit to enable them to accomplish more than just the baseline reporting requirements.

This transparency report represents our commitment to continue to improve the way we work to address your needs and expectation. We are here to inspire trust, gain your confidence, and share our insights.

Somchai Jinnovart

Assurance Leader

1


8

PwC Thailand and our Assurance practice

2


9

2.1 PwC Network

The PricewaterhouseCoopers (PwC) network consists of firms that are separate legal entities. We are structured to work together to provide clients with quality service offerings throughout the world. Firms in the PwC network are members of PricewaterhouseCoopers International Limited (PwCIL), an English private company limited by guarantee.

Our mutual goal is to provide industry-focussed Assurance, Tax, and Advisory services to create value for our clients. We have 195,000 people working in 157 countries across the PwC network, who every day share their thinking, experience, and solutions to develop fresh perspectives and practical advice.

PwC’s Assurance practice works with many organisations to improve their corporate reporting and help them comply with regulatory requirements and contractual agreements.

We tailor our audit approach, using our extensive industry knowledge, to suit the size and nature of a client’s organisation. We understand regulations and legislation, so we can help clients with complex reporting issues.

In Thailand, we’ve been working with clients for more than 56 years. Our clients include some of the largest Thai and multinational companies, government institutions, and medium-sized companies with unique needs and requirements. Our close interaction and relationships with both economic and state bodies allow us to keep up with the fast-evolving business environment. There are some 1,600 people working in our Bangkok office.

2.2 Leadership structure

Our leadership structure aims to help us maintain our commitment to quality in every facet of our business (Figure 1).

2.2.1 GovernanceThe governance and leadership bodies and roles within PwC Thailand are:

• the Governance Board (the Oversight Board)

• the Country Senior Partner (the Chief Executive Officer or CEO)

• the CEO’s management team (the Management Board), and

• the firm’s partners, elected by way of a partner vote

We believe that sound governance and transparency form the bedrock of leadership, and we are committed to serving with integrity and good sense. The PwC network allows us to make use of the vast knowledge of member firms around the globe to provide greater value to our clients. Dedicated quality support teams demonstrate our strong commitment to meeting quality standards and requirements.

2PwC Thailand and our Assurance practice


10

Figure 1: PwC Thailand leadership structure

Each body works to ensure PwC’s transparency and service quality.

The Oversight Board

The Oversight Board currently comprises four partners elected by a special majority of firm partners. To maintain independence of the Oversight Board, the CEO is not eligible to be a member but can attend meetings as an observer.

The Oversight Board meets regularly and is responsible for the firm’s governance and oversight, as well as for sharing their input to support and monitor firm strategies.

The CEO and Management Board

Sira Intarakumthornchai is the firm’s CEO, and his role is to provide leadership for the partners and their teams, and to manage the firm,

including setting its short- and long-term strategic direction and making decisions on partner equity issues and affairs in his role as a Country Senior Partner. Sira is also responsible for appointing the firm’s Management Board and other management positions. He also advises on the firm’s organisational structure and on what should be a partner’s duties and responsibilities.

The CEO is ultimately responsible for risk management, quality and independence matters affecting the firm. He develops processes and structures to ensure strategies are reviewed thoroughly, associated risks are identified, and appropriate internal controls are implemented to manage the risks. This is to make sure that our work with clients is done smoothly.


Management Board Member / Risk & Quality Leader

Boonlert KamolchanokkulLeads identification and

management of strategic risk across the firm.

Management Board Member /

Assurance Leader

Somchai JinnovartLeads the Assurance practice.

Firm Level

Assurance Level

Assurance LeaderSomchai Jinnovart

Risk and Quality ManagementSenior professionals who act as the first point of contact for audit engagements and audit teams,

promote and share initiatives on audit quality and escalate issues.

Assurance Risk and Quality LeaderBoonlert Kamolchanokkul

Leads identification and management of strategic risk across Assurance.

3 other members

5 other members

Chief Executive Officer (CEO)Sira Intarakumthornchai

The firm’s partners elect the CEO for a term of four years. Sira has been CEO since 1 July 2012.

PartnersThe partners’ governance role includes, through a partner vote, electing or removing the CEO and members of the Oversight Board and approving or denying candidates for admission as partners, any recommendation or proposal that a partner be required to withdraw from the firm, and any amendments to the firm’s partnership agreement.

2.3 Quality support team

2.3.1 Quality CommitteeThe PwC Thailand Quality Committee was set up over seven years ago and consists of our Assurance partners who takes Functional Area Leader role. The committee oversees how we control quality. Specifically, they meet regularly to:

• monitor the operation of the quality control system

• initiate remedial action to address exceptions and deficiencies in audit quality, and

• report any significant audit quality matters and provide recommendations on quality enhancement initiatives to the Assurance Leader and Risk and Quality Leader.

The functional leaders and managers of the key areas within the Assurance practice support the committee:• Accounting Consulting Services (ACS)• Methodology & Technology (M&T) • Risk & Quality (R&Q)• Human Resources • Learning & Development • Resources planning

2.3.2 Risk and Quality groupThe Risk and Quality (R&Q) group supports the firm’s leadership in achieving its strategic goals and assists the various practices during their engagements.


11


A Partner – manager level staff will be working with an average of 15 staff. This is to ensure that each working team is closely reviewed and supervised by managerial level staff.

Figure 2: Assurance Staff/Partner-manager ratio

Staff Partner - manager


12

They advise on how to manage risks, ensure consistent quality, and be compliant with relevant laws, regulations, and policies, all while achieving business objectives.

R&Q provides services for risk management, in-house legal counsel, independence, and quality, at both firmwide and lines of service levels.

The R&Q team comprises one part-time partner, nine full-time dedicated directors, senior managers, managers, and supervisors. Five full-time administrators support the team. The R&Q Leader reports directly to the CEO, the Management Board, and the lines of service leadership team.

R&Q is also on the agenda of all leadership meetings.

In Thailand, we’ve established a full-time audit Methodology and Technology (M&T) team led by Implementation Partner, with support from five Methodology team members and three Technology team members. The Methodology team provides updates and new developments on auditing, provide consultation on

methodology related issues, and ensures the practice staff follow PwC’s audit methodology, while our Technology team acts as help desk support for our auditing software.

Our aim is to continuously improve overall audit quality, simplify the process wherever possible, and maintain trust. We endeavour to successfully meet and surpass the minimum audit quality standards set by PwC Network and local requirements. Our main responsibilities include:

• implementing audit methodology and technology

• developing and conducting training using shared concepts, local practical issues, and real-life examples

• communicating new and updated policies, procedures, and methodologies and keeping them up to date

• addressing methodology and technology issues, and carrying out engagement reviews to identify and improve audit quality and efficiency

Figure 3: PwC client satisfaction survey 2015

We always want to hear what you think of us, which is why we recently asked our clients to rate us.

We asked our client to rate their thoughts of PwC on different attributes. None is rated as unsatisfactory and here is where we do particularly well.

Communication

Service improved

People

Meet client’s objectives

OutstandingUnsatisfactory

of survey respondents said Quality & technical skills and People & professional.

We also asked them in which area we outperform our competitors.

63%



13

2.4 Our work with the community

We’re continuing our corporate responsibility (CR) drive by sharing our time, knowledge, and resources. Our goal is to make a difference and bring value to the communities in which we all work and live.

We believe in being an active part of the local community we are in and of the global movement of responsible business practices to create positive change in the world.

Here at PwC Thailand, we work with both local government agencies and the private sector on various CR projects.

We aim to share our own professional strengths by helping to develop skills and to promote the practice of transparency in our communities. We do this through various educational programmes on financial literacy.

We intend to create value for businesses and our communities. And we’re committed to

building a stronger foundation for Thailand’s future generations.

Putting our values into action, our Financial Literacy Matters programme

In November 2014, PwC Thailand, together with UNESCO and the Office of the Non-Formal and Informal Education (ONIE), hosted training to promote financial literacy among ONIE students.

The training, led by a group from PwC, highlighted how to manage personal finances. This included managing spending, insurance, risk management, home financing, credit cards, loans, and retirement plans.

The programme, which stressed the importance of accounting and finance, also helped to educate young people on King Bhumibol Adulyadej’s Philosophy of theSufficiency Economy.

“We believe a sound practical education is the foundation for a community to achieve sustainable growth, contributing to a better quality of life for its people and advancing the Thai economy ,” Sira Intarakumthornchai, CEO of PwC Thailand says.



14

Quality people“Quality work means having the best people on the job. This is why people are our top priority. We look for individuals who understand business, who we can develop into a PwC professional. We want those who can apply technical skills to practical problems and who can cultivate meaningful relationship with clients.

We are only as good as our people, and we go through a rigorous process and use significant resources to make sure that the individuals we have are best fit to perform quality work.”

3


15

Figure 4: PwC Professional framework

3.1 PwC Professionals – The network’s leadership framework

We recognise that our people are our greatest asset and that they give us a competitive advantage. PwC Professional is our network’s leadership framework, which helps accelerate and enrich our people’s development and set our brand apart.

To really stand out and stay competitive in a constantly changing world, we need to offer more than technical competence. Crucial attributes we want our people to demonstrate are leadership, an awareness of the business environment at local and global levels, and the ability to develop business relationships. We need to be a leader who inspires others and who can lead clients, teams, and others through change.

The PwC Professional framework was designed to help us achieve the skills and capabilities to be consistently outstanding. To support our business strategy, we use this one simple global leadership framework to recruit, develop, and assess our people. It is the benchmark for our annual performance reviews, and it is the foundation for our training and coaching initiatives.

3.2 Getting the right people for our team

We are always on the lookout for the right people to join our Assurance team, and we look to our PwC Professional framework to provide guidance in our selection criteria. As a firm, we look forward to developing auditing skills from day one.

Our graduate recruitment process starts with our recruitment roadshow where we talk tostudents about a PwC career at the top-tier universities in Thailand. Each year over 700 candidates apply, go through a group exercise, and a panel interview process. In the end, we invite around 250 successful candidates to become a part of PwC, and of those invited, about 80% accept the opportunity.

• GPA and accounting degree

• Extra-curricular activities and internship

• English test• Aptitude test

• Group exercise• Panel interview

Shortlist candidates

Assess skills

Assess interactions

Recruit candidates

• Universities road shows• Walk-ins and online

applications

Figure 5: PwC Assurance recruitment process overview

3Quality people


16

When people join PwC, we want them to start by learning the different aspects of clients’ activities and understanding their businesses to identify where our audits can add insight and value.

We want them to be able to perform an audit with the highest quality and transparency – the critical work of an auditor underpins investor confidence, makes our clients more competitive, and supports the market economy. At PwC, our staff will get to go beyond the obvious and develop real insights into a client’s markets, technology, people, and management, as well as its finances. Their curiosity is key, as is the ability to take on new challenges with flexibility, agility, and intelligence.

3.3 Learning and Development

We provide, from day one on the job, continuous professional and personal development opportunities designed to be stimulating, challenging, and fun.

PwC fosters a culture of lifelong learning and development based on a model of 70% on-the-job training (Experience), 20% coaching (Exposure & exchange), and 10% formal training (Education), as shown in Figure 6. This approach helps our people keep up-to-date, informed, and highly-skilled throughout their career with us.

For realistic and meaningful progress, we use a 70-20-10 learning model for people to:

• gain extensive on-the-job learning experience

• truly embrace coaching by giving and receiving constructive feedback for their own growth and to inspire others’ development, and

• continue training and developing both technical and soft skills.

We want our people to develop and learn from every opportunity, stay open-minded, and be intellectually curious to maintain positive attitudes towards any challenge they face. We want them to be able to demonstrate and maintain their professionalism in every interaction with each other and with clients. These expectations are reflected in the staff development plan and evaluation process.

We provide extensive training courses that help our people perform their role and achieve expectations. We encourage coaching and mentoring to foster a coaching culture. We embed tips and tools in our in-house and external courses, which people can choose from to expand on their experience with PwC.

We design training programmes that are world class, innovative, and forward-thinking. We introduce new training techniques into our core curriculum dedicated to getting the best out of our people. Our training programmeincludes:

70%Experience

360°feedback • Job shadowing • Consulting methodology champion • Cycle of experience • Public speaking • Proactively training others

20%Explore & exchange

Coaching • Mentoring • Feedback • Role model • Participate in external networking events

10%Education

Online • Self-paced • Seminars • Competency • Industry • Technical accreditations • Core curriculum • Talent and leadership • Service priority

Figure 6: PwC 70-20-10 framework

3Quality people


17

(i) Mandatory (ii) Role-based (iv) Languages(iii) Business skills

Peer group learning

Quarterly updates Certified public accountant (CPA) support

Language courses

We frequently assess our curriculum content to ensure that it continues to build and support the capabilities and attributes that are essential to our Assurance business.

The Assurance practice provides a training curriculum for all partners and staff focussedon the development of technical excellence. The curriculum comprises mandatory, core, and elective modules. Mandatory learning modules are actively enforced, and failure to complete a mandatory course will result in remediation as needed to comply with Assurance standards and firm policies.

In 2015, our Assurance partners and staff completed, on average, 80 hours of personal and professional development training. For Assurance we had total training hours of approximately 63,000 for our 2015 fiscal year.

3.4 Talent management

Our business plans and strategy and the speed at which we project our business will grow define our talent management strategy. The firm invests in creating an environment that values excellence, teamwork, and leadership for a stimulating and meaningful working experience for our people. Our aim is to maintain a leading position in professional services, so we need to ensure that:

• We foster the development of people who have career aspirations aligned with our business direction and goals (Talent Identification).

• We can readily fill key roles with competent internal candidates to meet the firm’s evolving needs (Talent Pipelines).

• We are aware of our own internal bench strength and development needs to be ready for future contingencies (Talent Development).

3Quality people

Peer group learning is a part of our Assurance Foundation training programme. After completing classroom and on-the-job training, which normally takes about a few weeks, the associates will gather again to attend this session.

Quarterly Updates are part of a role-based programme to enhance our technical knowledge and insights to ensure that we stay relevant and keep up-to-date with the business issues so that we are well positioned in the marketplace.

This CPA preparation programme is very well-received by our staff as it covers all exam subjects ranging from auditing and accounting to tax and law to IT auditing.

To ensure our workforce is ‘future-fit’ we need to offer more than technical competence. The language course we offer includes English, Chinese, and Japanese language courses.


18

We have a holistic view of our people. We aim to support career growth beyond a person’s current position at PwC while we map talent and develop skills to meet the firm’s performance goals.

3.5 Performance evaluation

Our performance evaluation process is conducted yearly for staff at all levels. We have a clear set of Key Performance Indicators (KPIs) for staff at each level which are in line with the five attributes of our PwC Professional framework (Please refer to Figure 4) to make sure our people are growing and becoming quality people, delivering quality work.

3.6 Global people survey

People are at the heart of our services and we believe we can only achieve quality work if our people are engaged and happy to be with the firm. To make sure that we are responding to our people professional needs correctly. The annual Global People Survey (GPS) is conducted across the entire network. The GPS lets staff share their perceptions on four key aspects that influence current and future policies, programmes and the work environment at PwC. The four aspects are whether or not our people:

• are satisfied with PwC • are proud to work at PwC• would recommend PwC to others, and• plan to be working here for the next 12

months.

We call this our People Engagement Index. In 2015, Thailand achieved a 94% response rate for this survey.

The survey results are reported to the Assurance Leaders and actions are planned to

address the key matters that are identified from the GPS. The GPS results and planned responses are then communicated to staff. For example, as a result of previous surveys we changed the way we offer staff benefits so that they were more flexible to each person's individual needs. And this was well received by our staff.

Based on the GPS results, we have recorded improvements in our people engagement index over the last four years.

3Quality people

Our average staff retention rate in 2015 18.15%Area from the GPS our people scored PwC highly:

Commitment to our firm

Satisfaction

Advocacy Pride


19

For our more experienced staff, we offer global mobility opportunities with short- and long-term assignments and with the option to participate in a variety of on- and off-the-job learning and development experiences. We encourage our staff to discover their full potential by seeking opportunities to grow and to explore new ideas. Secondments include assignments to the following cities:

3

34

12

1

11New York, US

Stamford, US

Aberdeen, Scotland

London, UK

Tokyo, Japan

Hong KongVientiane, Laos

Sydney, Australia

Our mobility programme

3Quality people


20

Quality service

“At PwC, quality is, and always will be, our highest priority and is inherent in everything we do. Our commitment to deliver quality services forms a key part of PwC’s strategic priorities.”

4

Figure 7: Audit quality indicators

1. Partner, manager and

QRP hours

7. Total and average staff

training hours


21

4.1 Our commitment to quality

Quality must start from the top with commitment from our leadership. We require our partners to include audit quality objectives as part of their personal plan.

In addition, our Accountability Framework, our key benchmarks for quality performance, is applied to partners and key management roles. By using the Framework, our leadership is actively responsible in helping us meet our quality standards.

The Assurance leadership team updates, approves, and communicates the Accountability Framework to partners on an annual basis. It is also a part of the leadership’s quality objectives; failure to meet them can lead to a cut in performance income and other consequences, up to the revoking of signing rights.

Depending on their grade, staff members are responsible for some key R&Q indicators. There is a set of guidelines including punitive actions for any non-compliance.

The calls for quality start at leadership and flow through our partners and staff by various channels:

Face-to-face sessions with partners and managers (i.e. Quarterly Technical Updates, Town-hall meetings)

Learning and development programs (i.e. Assurance core curriculums, Partner-Manager programmes, Methodology workshops, Annual Risk & Quality trainings)

Webcasts, e-learnings

Periodic alerts, emails, messages from leadership

Our top priorities to further improve quality are:

1. Developing audit quality indicators.

2. Involving Quality Review Partners (QRP) on higher risk engagements.

3. Always seeking help, always consulting.

Developing audit quality indicatorsThe key indicators cover various areas (Figure 7), and we use these to monitor and measure quality at both the firm and individual levels. They help partners understand their responsibilities, and their performance in each area is reported on a quarterly or annual basis.

We encourage positive behaviours according to these indicators, and they tell us early where to look for potential issues.

4Quality service

8. Full-time equivalent in

technical resources

3. Staff retention

rate4. Staff per

partner/ manager ratio

6. Independence

testing

2. Average years of

experience

5. Result of internal/ external

inspections


22

Involvement of Quality Review Partners (QRP) on higher risk engagements

For higher risk work (the common ones include engagements with listed entities, higher profile clients, and clients preparing to make an initial public offering), the engagement team will be supported by a QRP.

The Assurance Leader will appoint a QRP with the agreement of the Assurance risk management partner.

QRPs are required to have sufficient technical knowledge, industry expertise, time, and authority, as well as an ability to objectively evaluate the engagement team’s significant judgements and conclusions. First-time QRPs are required to complete mandatory QRP training before taking on the role.

QRPs involvement in an engagement is monitored and reported to overseeing partners regularly.

QRPs have access to real-time or hot review findings which allow them to monitor the audit quality of their assigned engagement and be able to follow-up with audit teams on any issues they encountered.

Always seeking help, always consulting

Reviewing work and consulting with other appropriately qualified people before delivery improves the quality of service and reduces risks. Consultation is one of the fundamental strengths of PwC.

We make great effort to create a consulting culture within the firm where our people are encouraged to talk to another party whenever they are in doubt.

Consultation not only means asking advice from another member of the team but also means, when appropriate, seeking advice from various experts within the firm (or another PwC office) to improve client service or to resolve a difficult or contentious matter.

In addition, we developed databases internally so our teams can get the consultation they need, and it allows our internal technical experts to respond to and monitor the progress of enquiries they receive.

Our leadership believes that the quality control environment, policies, system, and processes described in this document comply with applicable regulations. Our compliance with the quality standards is regularly evaluated through various reviews and inspection programmes by relevant regulators. The results of these reviews and inspections provide a reasonable basis that our audits consistently meet the required quality standards.

Figure 8: ISQC1 components

International Standards on

Quality Control 1

Engagement performance

Ethical requirements

Human resources

Monitoring

Leadership responsibilities

for quality within

the firm

Acceptance and continuance

of client relationships and specific

engagements

4Quality service


23

Accounting Consulting Services With the complexity of financial reporting standards, it is important that our clients receive clear and consistent advice. Our Accounting Consultation Services (ACS) group provides support and guidance both internally and externally on the accounting treatment of complex issues, training on accounting standards, and reviewing financial statements for compliance with financial reporting standards. ACS works in topic teams: financial instruments, business combinations, and revenues/liabilities.

With connections to the Global ACS team, we are able to call for support from specialists from the network. Engagement teams work closely with ACS on significant accounting issues to arrive at a conclusion that is acceptable under the financial reporting framework. If there are differing views, a technical panel discussion is organised.

Our leadership believes that the quality control environment, policies, system, and processes described in this document comply with applicable regulations. Our compliance with the quality standards is regularly evaluated through various reviews and inspection programmes both internally within the firm and externally under the global review programme by relevant regulators. The results of these reviews and inspections provide a reasonable basis that our audits consistently meet the required quality standards.

4.2 Our compliance with ISQC1

The International Standards on Auditing (ISA) requires PwC Thailand to have a quality control system over its auditing practice. These controls are part of PwC Thailand’s day-to-day

activities. Our quality control system complies with the International Standards on Quality Control 1 (ISQC1), Quality Control for Firms that Perform Audits and Reviews of Financial Statements and Other Assurance and Related Services Engagements, issued by the International Federation of Accountants (IFAC).

4Quality service

6. Meaningful conclusionsA PwC audit opinion is carefully considered and supported by robust audit evidence. It is much more than just an audit opinion —, in addition to our audit opinion, we bring the best expertise from our network, business insights, industry experience and thought leadership to provide practical recommendations on how to mitigate risk and deeper insight on how to improve business planning and strategy.

5. Robust testingWe use data intelligently, testing and visualising information to focus on what really matter to our clients. This will help our teams to better understanding our client’s businesses, identifying risks and providing meaningful insight.

4. Intelligent scopingThis covers where we go and what we do: the best types of audit evidence to obtain, the right areas of the client’s operations to focus on, and the best audit resources needed to deliver this. We use our smart planning approach and software to create the optimal scope and to make sure that execution is as effective as possible.

3. Relevant risksWe focus on the risks that could have a material impact on financial reporting. We improve our people’s risk assessment skills and help them use their natural curiosity and professional scepticism to identify the risks and develop an appropriate response. We provide our clients with a risk comparison against peer companies as well as an analysis of issues clients should be concerned about.

4.3 PwC audit approach

4.3.1 The PwC global audit approach

The overall PwC audit framework provides a holistic approach to make sure we conduct quality audits. It applies clear principles to audit work with the appropriate amount of supporting detail. Our six-step audit process ensures an audit that is robust, insightful, and relevant (Figure 9).

4.3.2 Review and supervision throughout the auditAn effective review and supervision strategy supports overall audit quality, foster team development, and help the engagement leader and team manager to meet their responsibilities. It helps improve the audit experience for both our teams and our clients.

4.4 Supporting tools and technology

At PwC, we deliver both quality auditing and valuable insight for our clients, using our well-trained and talented staff, risk assessment processes and intelligent scoping, and smart tools and technology.

The Assurance Transformation Programme aims to make PwC truly distinctive in the market. The programme offers tailored-made tools that use data and new technology to simplify and standardise our audit methodology effectively to improve quality and efficiency. Its innovation allows a PwC audit to be carried out anywhere, anytime (Figure 10).


24

1. Client acceptance & independenceWe’ve developed unique client acceptance and independence processes and systems. We fully understand our clients and have valuable insights when evaluating their risks. We accept clients when no conflicts will arise and confirm our independence to our clients promptly

2. Deep business understandingWe use powerful business analysis frameworks and our extensive industry and business knowledge to make sure we have a broad and deep understanding of clients and their business.

Figure 9: PwC Global audit approach

4Quality service


25

Aura

Aura is our global audit software used across the network and across all audit engagements.

This brings consistency in our audit approach across audit teams and firms within PwC network.

AuraNow

AuraNow is a monitoring tool providing real-time information on the quality and status of engagements, enabling us to visualise progress and prioritise our efforts.

Aura Online

Aura Online is a web-based tool that provides the ability to view active and archived engagements without having to install the Aura client or having local replicas of engagement files.

This makes it easier for us to work together, leading to a more proactive and responsive service so any issues raised during the audit can then be resolved promptly.

Smart Guidance -Effective Learning at the Right Time

Smart Guidance supplements the PwC audit guide with short, targeted, and engaging videos on areas that our people find helpful - providing simple and concise reminders and reinforcing key messages in each area.

This helps our people spend less time looking for guidance and more time delivering a high quality service to our clients.

Connect Connect is secured tool that allows PwC staff to request documents and enables our clients and us to upload and download documents and to create action items and comments.

It monitors information flows in real time so we can better collaborate with our clients. It’s available on smartphones, tablets, and PCs, allowing both the client and us to check progress anytime and anywhere.

4Quality service

Figure 10: Audit tools - available

At PwC, we deliver both quality auditing and valuable insight for our clients, using our well-trained and talented staff, risk assessment processes and intelligent scoping, and smart tools and technology.

A


26

Confirm

Confirm is a secure, web-based portal that enables an automated and standardised global end-to-end, paperless confirmation process.

Confirm will improve quality with an effective, efficient testing strategy through a consistent global approach to the confirmation process.

Count Count takes advantage of new technologies and platforms for performing and documenting all aspects of an inventory count observation.

This application helps to get the count right the first time, help our teams document the results of that count in real-time, and deliver a ‘no surprises’ experience that our clients expect.

HaloData Assurance, known as Halo, will revolutionise the PwC audit, providing greater Assurance and deeper insight. Its market-leading Assurance technology tests and visualises information, testing data to its upper limits. Halo is changing the way we audit and is unlocking a wealth of insight.

Halo for Journals will be the first of the Halo products to be introduced. This makes it easier for the engagement team to identify what may be unusual or of higher risk and start the process of auditing it which will increase efficiency as it will be delivered in fewer hours than today’s manually intensive process and will be relevant for audits of all sizes.

Other Halo product includes:

Performance analyserProviding the ability to work through and analyse financial results to identify trends, insights, and outliers, obtaining a better understanding of historical performance and assisting with decision-making.

Bank interest incomeRecalculates interest income, with a current focus on mortgages.

4Quality service

Figure 11: Audit tools – coming up soon

4.5 Integrity, objectivity and ethical requirement

4.5.1 Ethical and business conductThe reputation and success of PwC Thailand depend on the professionalism and integrity of every partner and employee. All PwC Thailand partners and staff are expected to uphold and comply with the standards developed by the PwC network and PwC Thailand.

Globally, we have the PwC Ethics and Business Conduct (E&BC), grounded in our core values of excellence, teamwork, and

leadership. This global E&BC acts as an umbrella code for all PwC firms.Upon joining, new staff members receive copies of the Code of Conduct and must attend a briefing session. All staff and partners are expected to abide by the values expressed in the code during the course of their PwC careers.

This code specifies that we must use our integrity, good judgment, and conscience when making a decision or faced with ethical dilemmas. The E&BC guides how we work and answer questions to help us through difficult ethical situations.


27

We have in place a database that is designed to help raise awareness of the importance of ethical conduct in our team by being readily accessible to staff. It helps us avoid situations that could have a negative impact on our clients, people, and reputation.

There are also upward reporting mechanisms to address any complaints and allegations raised by PwC Thailand employees concerning inappropriate behaviour or failure to comply with professional, regulatory, and legal requirements as set out in the PwC Global Code of Conduct guidelines as well as PwC Thailand’s policies and guidelines. These complaint and allegations, if any, are addressed by the Ethics Officer and, if unresolved, will be handled by the Business Conduct Committee.

4.5.2 Independence policies, processes, and systems

PwC Thailand has adopted the PwC Global policies and related rules for our independence and compliance practice, complemented when necessary, by more restrictive local

professional and regulatory rules.

Independence policies and guidance are reviewed and revised when needed. The firm’s independence policy covers, among others, the core areas as outlined in Figure 12.

As a member of the PwC network, we have access to a number of global systems that assist our people and us in complying and in monitoring compliance with regulatory, professional, and PwC independence requirements related to financial interests and business and service relationships with clients. In addition, PwC Thailand has a number of systems developed for locally uses, such as a relationship-checking database, to support our work.

PwC Thailand has a designated Partner Responsible for Independence (PRI) with appropriate seniority and standing supported by a dedicated team within Risk & Quality. They are knowledgeable about independence matters and compliance with independence rules and regulation.

4Quality service

IFAC code of ethics

PwC GIP

The policy sets out policies and processes designed to ensure that PwC firms, partners, and employees are, and can be seen to be, objective in all dealings with all clients and independent in respect of Assurance clients.

US SEC rules

Local regulationsProvision of professional service

Financial interest and relationships

• Individual

• Firm

• Independent assessment

• Independent monitoring

Figure 12: PwC Global Independence Policy (GIP)


28

The roles and responsibilities of the PRI:

Disciplinary policy for independence

Our independence policies and processes require that we report and address any violations that occur. A partner or staff member could face financial sanctions or other disciplinary actions if they are in violation.

4.5.3 Insider trading

Insider trading violates legal and regulatory requirements, damages our brand and reputation, and may involve professional and criminal penalties for those involved.

The firm has a clear and stringent policy which prohibits PwC personnel, and others associated with PwC, to become involve in, or associate with, the use of inside information in the buying or selling of securities. The firm’s insider trading policy applies regardless of the circumstances surrounding how the person became aware of the insider information and regardless of whether the insider information actually influenced the person’s decision to buy or sell a security.

Figure 13: PwC Independence –core areas

1. Implementing PwC Global’s independence policy (including US SEC independence rules) and procedures, system, and controls.

2. Ongoing training and promotion of the independence polities to practice partners and staff.

3. Monitoring compliance with independence policies.

4. Embedding appropriate “tone at the top” and culture relating to independence.

5. Consulting on independence issues with client service teams.

6. Enforcing disciplinary policies and processes for non-compliance with independence policies and procedures.

7. Putting in place compliance activities and remedial actions.

4Quality service

Independence core areas

Independence policies and procedures

Restricted independence entity list

Relationship checking

Permissibility of services

Consultation and enquiries

Annual compliance confirmation (ACC)

Firm interests and business relationships

Personal independence


29

This policy is regularly communicated with our partners and staff across the firm. Severe sanctions will be imposed for any violation or non-compliance with the policy.

4.6 Client and engagement acceptance process

Before we begin work for any new client, we must go through a process to make sure that our engagement will not compromise our ability to serve all our clients independently. This process is based on the PwC global network’s proprietary decision support systems for audit client acceptance and retention called Acceptance and Continuance (A&C).

A&C facilitates a determination by the working team and risk management specialists on whether the risks related to an existing client or a potential client are manageable and whether or not PwC should be associated with the particular client and its management.

4.7 Partner remuneration

Under the firm’s policy, Audit partners must not receive incentives or remuneration for selling non-audit services to their audit clients.

The final allocation and distribution of profits to individual partners is considered by the Assurance Leader and reviewed by the Management Board, after the partners’ performances are assessed and the annual financial statements are approved. The Oversight Board approves the process and oversees its application.

Each partner’s remuneration reflects their performance as an auditor and how well they performed against key performance indicators, individually tailored to their role and responsibilities. The Accountability Framework, which includes key performance indicators and sanctions, is also part of the partners’ performance evaluations and remuneration. There is transparency among the partners over the total income allocated to each individual.

4Quality service


30

Monitoring of quality

5

“Quality monitoring is an integral part of our continuous improvement as it provides input to the firm’s leadership on the overall quality of our Assurance practice.”


31

5.1 Our monitoring programme

5.1.1 Overview of the monitoring programme

PwC Thailand is responsible for monitoring the effectiveness of its quality control system which includes carrying out, or arranging for, independent reviews both at the practice level and at the individual project level. Figure 14 summarises our monitoring programmecurrently in place.

Quality monitoring is an integral part of our continuous improvement as it provides input to the firm’s leadership on the overall quality of our Assurance practice. Failure to meet performance standards is treated seriously under the firm’s Accountability Framework (Section 4.1).

Global Assurance Quality Review (GAQR)

The GAQR programme is designed to be independent, consultative, and trusted programme that is objective, independent and risk-based. At the practice level, an Independent Quality Management Review (QMR) occurs at least every three years with updates during the intervening period. The QMR tests the effectiveness of the firm’s quality control system

in various functional areas under ISQC1. The last QMR at PwC Thailand in 2013 noted that the Assurance practice continues to be well managed with the leadership setting an appropriate tone at the top about risk and quality.

Engagement level review, known as Engagement Compliance Reviews (ECRs), are undertaken on significant higher risk engagements. All Assurance partners must have at least one of their engagements reviewed every five years. Additionally, the ECR is conducted periodically on engagements determined to be Higher Profile Clients.

Internal review programme

All Assurance partners must have at least one engagement reviewed internally under the Integrated Review Programme (IRP). In this programme, the engagement is selected based on criteria approved by the Assurance Leader.

Reviews Practice unit review Engagement review

Global/network review programme

• Network standards (annual) • Quality management review

(every three years with an annual update in intervening years)

• Engagement compliance review (Review frequency is specifiedusing risk-based approach)

Territory quality review programme

• ISQC1 evaluation (annual) • R&Q KPIs (quarterly and annual)

• Integrated review programme (annual)

Regulatory reviews/inspections

• Regulatory inspections (annual or as notified)

• Regulatory inspections (annual or as notified)

Figure 14: PwC Monitoring programme

5Monitoring of quality


32

The IRP is undertaken on a hot or real-time basis, so that teams can remediate the findings on a timely manner.

The internal reviewer will go through a standard questionnaire from the Engagement Compliance Review (ECR) checklist, with some local additions, about quality against the selected engagement.

The results of their reviews will contribute to the evaluation under the Accountability Framework and R&Q indicators of partners, directors, and managers.

External inspections

Over the past six years, both local and overseas regulators inspected the firm’s Assurance practice.

PwC Thailand and its partners are authorised by the Securities and Exchange Commission Thailand (SEC) in Thailand to undertake statutory audit work. The SEC inspects PwC Thailand on a regular basis with annual reviews of the firm’s quality control system and of selected engagements. The latest SEC inspection report issued in 2014 concluded that the firm’s overall quality control system was ‘Good‘.

In addition to the reviews by the local regulator, the US Public Company Accounting Oversight Board (PCAOB) inspected PwC Thailand in 2010, 2012 and most recently 2015.

In these years, the review did not identify any audit performance issues that, in the inspection team's view, resulted in the firm failing to obtain sufficient appropriate audit evidence to support an audit opinion. In addition, the inspection team did not identify anything that it considered to be a quality control defect that warrants discussion in an inspection report.

5.2 Our commitment to continuous improvement

Quality improvement program

Over the past three years, we have put further focus and resources into improving audit quality. This has included additional centralisedR&Q initiatives focused on targeted training, remediation, and monitoring activities across the practice. These initiatives have been actively monitored, and appropriate resources have been applied to improve audit quality at the engagement level. To identify the areas of focus for these initiatives, we conduct a root cause analysis.

The root cause analysis process, which addresses key findings from reviews and inspection programme, is performed in a structured and holistic way following guidelines and templates provided by the network. The identified root causes fall under four categories (technical knowledge, review and supervision, professional scepticism, time and resources).

The firm then develops a Quality Improvement Plan, targeting the root causes and establishing the action plan. The International Team Leader (ITL) provides inputs to the Quality Improvement Plan. It is reviewed and approved by Assurance Leaders.

The Quality Improvement Plan is then implemented and monitored on a regular basis by the Quality Committee and the ITL, who reports the progress to Network Quality Review Leader.

The quality improvement initiatives are developed based on the key aspects as outlined in Figure 15.



33


Development of alerts, tools and templates (e.g. special audit considerations, checklists, examples of documentation)

Leadership & communications (e.g. quarterly message from Assurance Leader, quarterly technical update)

Policy enhancement and clarification (e.g. reinforce policy, develop policy guidance)

Ongoing monitoring process (e.g. compliance testing on areas of concern,

quality indicators, monitoring programme)

Training programmes (e.g. Assurance core curriculum, Partner-manager

programme, annual R&Q training, M&T workshop)

Accountability (e.g. FY15 Accountability Framework, partner KPI

dashboard, staff R&Q KPI)

Figure 15: Our quality improvement initiatives

Quality improvement

initiative

Our plan for the future

6

After three years in development, the International Auditing and Assurance Standards Board (IAASB) released a set of standards that are game changing for shareholders and the profession. These new standards will play a significant role in the audit profession as they aim to make audit reports more informative, comprehensive, and insightful. Reports will need to provide more information on key audit matters, going concerns, and other information that auditors believe is important for stakeholders to know. This will help the stakeholders, such as investors, have a clearer picture of the company.

As auditors, this development brings us new opportunities and ideas. It will allow auditors to innovate within public audit reports and more visibly demonstrate the value and relevance of an audit. It will be as new to management, audit committees, and users as it is to auditors. Where similar changes were rolled out (such as in the UK), the reaction from shareholders and other

stakeholders has been very positive. There is room for improvement, but shareholders saw the first reports as a change and much more valuable.Around the world we will be on a learning curve as it will take time for us to cultivate the new audit reports. Getting feedback, good and bad, and sharing experiences across the network firms will be very important as the new reports are released. The feedback is hugely important in helping us to continue improving the quality of our audit reports and providing value to our clients and the public as a whole.

While the IAASB’s new standards are not effective until the end of 2016, we have to prepare our people to be ready for this new era. The PwC network has been leading the debate from the outset, with widespread engagement of senior practice partners from the beginning, early exploration of new possibilities, and field-testing the standard setters’ proposals. We’re eager to embrace the spirit of the new standards with insightful and informative audit reports.


34

www.pwc.com/th

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

2015 PricewaterhouseCoopers ABAS Ltd. All rights reserved. ‘PricewaterhouseCoopers’ and/or ‘PwC’ refers to the individual members of the

PricewaterhouseCoopers organisation in Thailand, each of which is a separate and independent legal entity. Please see www.pwc.com/structure for

further details.

Documents

Transparency report - PwC · 2015. 10. 2. · PwC Thailand/ Transparency report 7 You should have peace of mind every time you work with PwC. This happens when you know we’ll meet