PwC UK has confirmed it will split its audit practice, with one business to focus on external audits and the other on internal audits and issues such as cyber security and technology risk.
The big four firm has also committed £30 million each year to train staff and introduce new technology initiatives to improve audit quality, promising to double the face-to-face training program for its auditors.
PwC UK will also look to add more than 500 experienced auditors to its ranks and increase by two-thirds the number of specialists in its audit quality control team.
The firm’s moves come amid intense scrutiny from the UK’s Competition and Markets Authority, which has called for the big four to undergo an operational split to ensure that the audit arms are under separate management from the rest of the firms’ business.
“Over the last year, we have been listening to the views of a wide range of stakeholders about the future of audit, exploring how it needs to change to meet society’s evolving expectations,” said PwC UK head of audit Hemione Hudson.
“Today’s announcement is a demonstration of our commitment to audit and to continually improving and strengthening audit quality. We have said for some time that we support changes that will improve audit quality. The investments and changes we are putting in place will ensure that our people have the skills, knowledge and mindset to perform audits to a consistently high quality day-in, day-out.
“It is right to continually review how our audit practice operates to ensure we are focused on conducting the most challenging and objective audits. These actions will ensure more consistent audit quality and increased transparency while at the same time strengthening our market resilience.”
PwC Australia has sidestepped questions over whether it would follow in the footsteps of its UK counterpart, noting that they both had “different regulatory environments”.
“The UK firms are responding to issues that have been raised directly by the UK regulators and a number of recent regulatory reviews. The UK and Australian markets are different with different regulatory environments,” a PwC Australia spokesperson told Accountants Daily.
“The conversation we are having locally is a holistic discussion, considering matters of audit quality, independence, conflicts of interest and the needs of businesses and their shareholders.”
Most of the firms have called for a more balanced approach to assessing audit quality, with PwC releasing its internal scorecard of measures of audit quality such as internal inspection findings, restatement rates and adjustments to financial statements in a bid to showcase a broader overview of key indicators of a quality audit.
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.