FRC Conference

Audit Firm Culture: Challenge. Trust. Transformation.


Audit firm culture is a critical component of an audit firm’s ability to deliver high quality audits in the public interest. One critical attribute of a good, healthy audit culture is the ability for auditors to exercise professional scepticism and challenge when performing audits. The FRC’s ongoing quality review data highlights ineffective challenge of management as a key driver of poor quality audits and the need for a culture of scepticism and challenge in the audit profession is also highlighted by Sir Donald Brydon in his Review of the Quality and Effectiveness of Audit.
 
Conference Overview
 
We are hosting a conference exploring the overall theme of creating a culture of challenge within audit firms to restore trust in the profession as part of the wider transformation journey. The conference will comprise of a week of lunchtime sessions, involving speakers and panel debates. We have leading academics, culture change experts, directors, regulators and standard setters speaking on the following topics.
 
To register to attend please click on the links below.
 
Session topic Description of the session Session details Recording
Building an audit firm culture that supports high quality audit This session considers the characteristics of audit firm culture that are most important in supporting a culture that delivers high quality audit. It also explores drivers of behaviour that can promote or inhibit an appropriate audit firm culture. Monday 21st June
13:00 – 14:15
Session recording
The role of the audit committee This session focusses on the role of the audit committee and other stakeholders in promoting, assessing and monitoring an audit culture that supports high quality audit. Tuesday 22nd June
13:00 – 14:15
Session recording
Developing a mindset of professional scepticism and challenge This session explores the processes and attributes that are key features of a culture that supports an auditor in being able to effectively challenge and exercise professional scepticism. Wednesday 23rd June
13:00 – 14:15
Session recording
Embedding and measuring organisational culture This session considers the different approaches that audit firms can apply to assessing their audit firm culture.  Thursday 24th June
13:00 – 14:15
Session recording
Audit firm culture, audit quality and the role of the regulator This session explores the link between audit firm culture and audit quality and the role of the regulator in supervising audit firm culture. Friday 25th June
13:00 – 14:15
Session recording
 
The conference will be of interest to audit professionals, audit committee chairs, directors and other stakeholders, academics in the accounting or behavioural science fields, international regulators and cultural change experts.
 
The objectives of the conference are to encourage discussion and debate, strengthen current consensus, identify and share good practice and speed up the pace of change for cultural transformation in the audit profession.
 
 
Audit Firm Culture – A Collection of Perspectives
 
Following the conference interested parties will be invited to submit a paper or written piece on any of the topics discussed at the conference for publication. This collection of perspectives will draw together the themes that were discussed at the conference and identify and share good practice. Contributions will be welcome from academics, cultural change experts, audit firms, regulators and other interested parties.
 

 
Audit Firm Culture: Challenge. Trust. Transformation.
Building an audit firm culture that supports high quality audit
21 June 2021 13:00 to 14:15 BST
Location: A Microsoft Teams link will be shared with attendees.
 
 
This session considers the characteristics of audit firm culture that are most important in supporting a culture that delivers high quality audit. It also explores drivers of behaviour that can promote or inhibit an appropriate audit firm culture. This session will consider the below questions:
 
  • What are the characteristics of an audit firm culture that are most important in supporting high quality audit?
  • What drivers of behaviour within an audit firm can either promote or damage attempts to establish and embed an appropriate audit firm culture?
 
This session will be moderated by Sir Jon Thompson, Chief Executive Office at the FRC. The speakers in this session are:
 
  • Roger Steare, The Corporate Philosopher
Roger Steare is one of the leading experts advising and coaching Boards and executive teams building high performing, high integrity organizational cultures. His work with BP after the Gulf of Mexico disaster has been crucial to the company’s recovery plan, with Roger’s ethical leadership training endorsed within the US Department of Justice Consent Agreement of 2016. He has advised Barclays, HSBC, Lloyds Bank and RBS after the credit crisis, PPI mis-selling and Libor manipulation scandals, with his work publicly endorsed by the Financial Conduct Authority. His most recent assignments have included Senior Advisor, People & Culture at Nationwide Building Society; and work on ethics with Clifford Chance and other global professional service firms.
 
Roger has worked with clients to achieve these results by using a robust evidence-based approach. He has conducted extensive empirical research on both personal and professional integrity, with his MoralDNA® Profile cited in papers published by the Chartered Management Institute, the Chartered Insurance Institute, EY, the FCA, Oliver Wyman and PWC.
 
Roger is Corporate Philosopher in Residence at The Business School, City University. He is also a post-graduate faculty member at Duke Corporate Education, Emeritus Executive Education, the FT’s Headspring Executive Development and London Business School.
 
  • Kevin Dancey, CEO, International Federation of Accountants (IFAC)
Kevin Dancey became IFAC’s Chief Executive Officer in January 2019. Kevin has a long history of leadership in the accountancy profession as well as in public service. As Canadian Institute of Chartered Accountants President and CEO, Kevin led the Canadian accountancy profession’s unification, becoming CPA Canada’s first President and CEO after the merger. His experience also includes serving as the Assistant Deputy Minister, Tax Policy, at Finance Canada (1993-1995), on the Canadian Auditor General Panel of Senior Advisors (2006-2015) and as an Auditing and Assurance Standards Oversight Committee member (2017-2018) and CCAF-FCVI Inc. board member (2008-2013).
 
Kevin’s international accountancy experience includes the Public Interest Oversight Board (2017-2018), the IFAC board (2006-2012) and the Global Accounting Alliance (2006-2016), where he was also Chair from 2008 to 2012.
 
Prior to joining the Canadian Institute of Chartered Accountants, Kevin was PwC’s Canadian Senior Partner and CEO and was a PwC Global Leadership Team member from 2001-2005.
 
  • Dr Yasmine Chahed, Visiting Research Fellow at Alliance Manchester Business School
Dr Yasmine Chahed connects the worlds of academia, policymaking, and practice to deliver insights that matter. She combines insight from 15+ years of independent academic research and teaching on the history and sociology of law and accounting at the London School of Economics.
 
Outside the university, Yasmine is a trusted adviser to senior executives and technical teams in the public and private sector. Most recently, she was a member of the FRC’s Future of Corporate Reporting team and worked with Sir Donald Brydon on his Independent Review into the Quality and Effectiveness of Audit.
 

 
Audit Firm Culture: Challenge. Trust. Transformation.
The role of the audit committee
 
22 June 2021 13:00 to 14:15 BST
Location: A Microsoft Teams link will be shared with attendees.
 
 
This session focusses on the role of the audit committee and other stakeholders in promoting, assessing and monitoring an audit culture that supports high quality audit. This session will consider the below questions:
 
  • What is the role of the audit committee and other stakeholders in promoting and assessing audit firm culture?
  • What actions can audit committees take to understand an audit firm culture and the extent to which the culture supports high quality audit?
 
This session will be moderated by Mark Babington, Executive Director of Regulatory Standard at the FRC. The speakers in this session are:
 
  • Duane M. DesParte, PCAOB Board Acting Chairperson
Duane M. DesParte has served as a PCAOB Board Member since April 2018.
 
He was appointed to the Board after retiring from Exelon Corporation, a Fortune 100 company where he served for 15 years; including 10 years as corporate controller, with chief accounting officer responsibilities for the integrity of the company's accounting and external financial reporting and related policies, methods, systems, processes and controls. Prior to joining Exelon, he spent 18 years in auditing, including as a partner at both Arthur Andersen and Deloitte.
 
To advance the Board’s goal of driving improvement in audit quality, Duane is particularly focused on the PCAOB’s inspection program, audit firms’ systems of quality control, and emerging technologies.He is also focused on enhancing the Board’s external engagement with stakeholders, particularly with audit committees and preparers. Duane is involved with the Board’s international activities, serving as Chair of the International Forum of Independent Audit Regulators (IFIAR).
 
  • Vanessa Teitelbaum, CPASenior Director, Professional Practice Center for Audit Quality
Vanessa is an in-house expert at the CAQ on auditing matters and has over twenty years of experience as an auditor. Vanessa leads the CAQ’s efforts to engage with the audit committee community related to audit quality.
Projects have included development of the CAQ’s Audit Quality Disclosure Framework, the External Auditor Assessment Tool, and the Audit Committee Transparency Barometer, among other publications. Vanessa facilitates the CAQ’s comment letter responses to proposed standards and regulations related to quality management, supervision of other auditors, quarterly reporting, the accelerated filer definition, and SEC independence rule amendments.

 
  • Oonagh Harpur, Independent Non-Executive
Oonagh Harpur joined the KPMG UK’s Public Interest Committee as an Independent Non-Executive in April 2018. Oonagh has over 30 years’ experience in the boardroom including 14 years in CEO roles in the private, public and third sectors. Her experience spans partnerships and professional service firms, financial and health services.
 
As a corporate strategist and CEO, Oonagh realised culture was a critical element of corporate success. Over the last 20 years, she developed her understanding and practice of culture first as chief executive of a national campaign developing an entrepreneurial culture in the UK, then leading the post-merger integration of an international professional services firm around culture and values. As part of the FRC’s Culture Coalition, Oonagh co-authored with Tomorrow’s Company and the City Values Forum “Governing Culture: Risk & Opportunity.A guide for board leadership in purpose, values and culture”.
 
Oonagh is also a member of the Civil Service Talent Advisory Group and the Culture Observatory Advisory Board, a trustee of the Scientific and Medical Network and a senior advisor, mentor and coach to a number of leaders in business, the civil service, NHS and not for profits.
 
  • Jock Lennox, Audit Committee Chairs Independent Forum Board Member
Jock Lennox is Chair of the Audit Committee Chairs Independent Forum (ACCIF), formed in 2016 to provide a platform for ACC views, Audit Committee Chair at Barratt Developments plc and held the same role at Dixons Carphone plc. He is Chair elect at Johnson Service Group plc. He was also Chair at Enquest plc and Hill & Smith Holdings plc (having previously been Audit Committee Chair). Jock was also Chair of the Trustees for the Tall Ships Youth Trust a charity taking disadvantaged and disabled young people to sea to transform their lives and life chances.
 
Jock retired from Ernst & Young in 2009, having been a partner for 20 years. At EY he worked as auditor and adviser to a range of UK listed companies with international and multi-national operations. He held several UK and Global leadership positions.
 
Audit Firm Culture: Challenge. Trust. Transformation.
The importance of a culture of challenge
 
23 June 2021 13:00 to 14:15 BST
Location: A Microsoft Teams link will be shared with attendees.
 
 
This session explores the processes and attributes that are key features of a culture that supports effective challenge of management. This session will consider the below questions:
 
  • What does it take to build a culture of challenge within an audit firm?
  • What process improvements can an audit firm make to reinforce a culture of challenge and what potentially conflicting drivers of behaviour can damage attempts to create a culture of challenge?
 
This session will be moderated by David Rule, Executive Director of Supervision at the FRC. The speaker in this session is:
 
  • Professor Karthik Romana, Blavatnik School of Government, University of Oxford
Karthik Ramanna is Professor of Business and Public Policy at the University of Oxford’s Blavatnik School of Government. An expert on business-government relations, sustainable capitalism, and corporate reporting and auditing, Professor Ramanna has studied how organisations build trust with stakeholders and the role of business in designing sensible and responsible “rules of the game”. He has authored dozens of research articles and case studies on non-market strategies in Africa, China, the EU, India, and the US, and he has consulted with several leading business organisations worldwide, including Fidelity, KPMG, McKinsey, PwC, Sonae, and State Street.
 
Professor Ramanna is director of Oxford’s Master of Public Policy programme. He is faculty chair of the Transformational Leadership Fellowship, a bespoke, by-invitation programme for senior corporate executives considering a second career that can bring their strengths to address broader societal challenges. He also directs the Case Centre on Public Leadership at the Blavatnik School, and he is fellow and member of the finance and investment committees at St John’s College.
 
Previously, Professor Ramanna taught leadership, corporate governance, and accounting at the Harvard Business School in both the MBA and senior executive-education programs. He has a doctorate from MIT’s Sloan School of Management. He is the author of Political Standards: Corporate Interest, Ideology, and Leadership in the Shaping of Accounting Rules for the Market Economy (University of Chicago Press).

 
Audit Firm Culture: Challenge. Trust. Transformation.
Embedding and measuring organisational culture
 
24 June 2021 13:00 to 14:15 BST
Location: A Microsoft Teams link will be shared with attendees.
 
 
This session considers the different approaches that audit firms can apply to assessing their audit firm culture. This session will consider the below questions:
 
  • What approaches can audit firms take to measure and assess their culture and how can the success of cultural transformation initiatives be assessed?
  • How can audit firms embed their desired culture and minimise gaps between this desired culture and their existing culture?
 
This session will be moderated by Claire Lindridge, Director of Audit Market Supervision at the FRC. The speakers in this session are:
 
  • Dr Roger Miles, Behaviour at Risk (BaR) insight; Oxford Scholar, PhD, FRSA
Dr Roger Miles researches human-factor risks among regulated financial providers worldwide, helping steer their responses to new Conduct regulations, Culture Audits and capital charges against Reputation Risk. He convenes knowledge sharing groups of senior executives including forums at UK Finance, whose Conduct and Culture Academy he co-founded in 2017.
 
Following audit practice with PwC he advised the Boards of large publicly listed companies in the UK, EU and US as a partner in investor relations firm Georgeson & Co. He was Director of Communications and Enterprises for the BBA (under Sir Brian Pitman), UK corporate affairs lead at FBE in Brussels, and later a Head of Risk Communications in HM Civil Service, before giving all that up to requalify as a risk psychologist and university lecturer.
 
With research among more than 400 firms participating in UK Finance Conduct sessions since 2016, he has amassed a unique exemplar body of conduct programmes, reporting designs, indicators and definitions.
 
His research uses language analytics and specialist ‘sensitive topic research’ techniques to identify previously unvoiced concerns. These findings guide the design of the firm’s framework of human-factor risk indicators and reports, encouraging the start of productive “conduct conversations” at all levels, embedding spontaneous best practice in risk reporting.
 
His published work includes the financial sector’s popular handbook Conduct Risk Management: A behavioural approach (2017) and Culture Audit: Reporting on behaviour to conduct regulators (2021), which includes chapters co-authored with senior regulators in the UK, EU, US and APAC. He co-edits the Encyclopaedia of Key Psychology Concepts for the London School of Economics annual Behavioral Economics Guides and is a contributing editor at Thomson Reuters Regulatory Intelligence.
 
In 2006-7, he analysed how banks were ‘gaming’ their public reporting on regulatory capital, whose theory was validated abruptly when global financial markets crashed in 2008. In 2010 he accurately predicted the change of financial regime to ‘behaviour-based regulation’; the UK’s Conduct regime launched in 2013 and included core principles he had earlier identified.
 
  • Dr Tom Reader, London School of Economics
Dr Tom Reader is an Associate Professor of Organisational Psychology at the London School of Economics. He directs the MSc in Organisational and Social Psychology, leads an MSc and Executive course on Organisational Culture, and is a chartered psychologist (MA and PhD, University of Aberdeen; Leverhulme Fellowship).
 
Tom’s research focuses on organisational and safety culture: he studies how norms and behaviours relating to risk-management, team-working, and ethical conduct emerge in organizations and contribute to outcomes (e.g., safety, decision-making).
 
Tom’s current work investigates how organizations can better detect and respond to signals of impeding and serious failure. Specifically, he explores how stakeholders who may lack institutional power (e.g., junior employees, service users) can have insights on critical problems at the operational-level of work (e.g., errors, accidents, conduct) that are unseen or unaddressed by senior decision-makers. Tom examines the psychological and organizational mechanisms (e.g., culture, data analytics) through which such insights can be given prominence, and thereby learnt from and used to support organizational resilience.
 
  • Professor Celia Moore, Imperial College London
Celia Moore is Professor of Organisational Behaviour at Imperial College Business School. Prior to joining Imperial, she held positions at Bocconi University in Milan and London Business School. She has also been a visiting scholar at Harvard Business School and a Fellow of the Edmond J. Safra Center for Ethics at Harvard University. She is currently an Academic Fellow of the Ethics and Compliance Initiative and sits on the UK’s Banking Standards Board Assessment Steering Committee.
 
Her teaching sits at the intersection of leadership and ethics. She is particularly interested in supporting individuals to enact their moral agency responsibly. She has worked with several organizations on how to support more ethical behaviour at work, including the Financial Conduct Authority (UK), the Institute of Chartered Accountants of England and Wales (London, UK), the National Health Service (UK), the Brookings Institute (Washington, DC), and several major financial institutions.
Her research focuses on how organizations unintentionally facilitate morally problematic behaviour, and on how to resist these consequences, which has been published in various renowned academic journals. Her work has been featured in the Financial Times, Wall Street Journal, Forbes, and Fast Company, as well as on NPR, the CBC, and the BBC.
 
  • Rick Borges, Director of Assessment (UK and International), Financial Services Culture Board (FSCB, previously the Banking Standards Board)
 
Rick Borges is the Director, Assessment (UK and International) at the Financial Services Culture Board (FSCB, previously the Banking Standards Board) and member of its Executive Committee. He has senior responsibility for the FSCB Assessment of culture, behaviour and competence across member banks and building societies and other firms outside membership in the UK and abroad.

Rick previously worked at the Professional Standards Authority for Health and Social Care where he was responsible for a programme to improve standards of behaviour and competence of healthcare practitioners. He also acted as an advisor on professional standards and regulation to other organisations, including the Press Recognition Panel (set up following the Leveson Inquiry), the Department for Education, the Government of Ontario (Canada) and the administration of Hong Kong. He started his career at the Department of Health, in the Private Office of a Minister of State, then worked for the National Information Governance Board for Health and Social Care, and in the Private Office of the Director General for NHS Informatics.
 
Rick is a trustee of National Voices, a charity in England, where he is also the Treasurer and the Chair of the Audit and Risk Committee. He has a master’s in law (LLM) and a postgraduate diploma in law in the UK.

 
Audit Firm Culture: Challenge. Trust. Transformation.
Audit firm culture, audit quality and the role of the regulator
 
25 June 2021 13:00 to 14:15 BST
Location: A Microsoft Teams link will be shared with attendees.
 
 
This session explores the link between audit firm culture and audit quality and the role of the regulator in supervising audit firm culture. This session will consider the below questions:
 
  • To what extent is audit firm culture an explanatory factor in analysing poor audit quality outcomes?
  • What role should regulators and regulation play in the direction and ongoing supervision of audit firm culture?
 
This session will be moderated by Kate O’Neil, Director of Stakeholder Engagement and Corporate Affairs at the FRC. The speakers in this session are:
 
  • Professor S.P. Kothari, MIT Sloan School of Management
S.P. Kothari is Gordon Y Billard Professor of Accounting and Finance at MIT’s Sloan School of Management. Professor Kothari has senior executive experience in government, academia, and industry with expertise in strategic and policy issues, securities regulation, auditing, and corporate governance. Most recently, he served as Chief Economist and Director of the Division of Economic and Risk Analysis at the US Securities and Exchange Commission from 2019 to 2021. In academia, Kothari was deputy dean of MIT Sloan School of Management (2010-15), and previously he headed the Department of Economics, Finance and Accounting at MIT.
 
In 2008-09, Kothari was global head of equity research for Barclays Global Investors; he was a director of Bombay Stock Exchange (BSE) (2015-19); and he has consulted extensively on economic and securities matters.
 
  • Carol Paradine, CEO, Canadian Public Accountability Board
Carol is the CEO of the Canadian Public Accountability Board. Prior to assuming the leadership role at CPAB, Carol was a partner in a major international firm. She specialized in assurance and advisory services for public companies as well as complex accounting and financial transactions. Carol served on the firm’s Board of Directors and Executive Committee with roles that included Managing Partner – Leadership Development and Succession, Managing Partner – Prairie Region and Acting Chief Financial Officer.
 
Carol currently serves on the board of directors as Chair, Nominating and Governance Committee of the Alzheimer Society of Toronto. Previous roles have included Chair, Manitoba Chambers of Commerce, President, Alzheimer Society of Manitoba, board and audit committee member, Alzheimer Society of Canada, board and audit committee member, CentrePort Canada, board and finance committee member, YMCA-YWCA National Capital Region, board member, Innovate Manitoba, board member, Harmony House and advisory board member, Carleton University School of Business. She also coached youth soccer for a number of years and was a lecturer and coach at Carleton University.
 
Carol has a Bachelor of Commerce degree, along with her Chartered Professional Accountant and Certified Public Accountant designations from Canada and the United States.
 
  • Graham Ward, Non-Executive Member of UK Civil Aviation Authority & Ben Alcott, International Director at UK Civil Aviation Authority
 
Graham is a Non-Executive Member of the UK Civil Aviation Authority and Chairs its Audit Committee. He also is President of Goodenough College, an Ambassador of the International Integrated Reporting Council, an Honorary Officer of the World Energy Council and a Fellow of Dulwich College.
 
Graham is a former: Deputy Chair of the FRC, Vice Chair of the Auditing Practices Board, President of the International Federation of Accountants (where he played a leading role in the creation of the Public Interest Oversight Board), President of the Institute of Chartered Accountants in England and Wales, Partner in PricewaterhouseCoopers (where he Chaired its World Utilities Group) and Vice Chair of the UK-India Business Council. He was the first Chief Commissioner of the Independent Commission for Aid Impact. Graham was appointed CBE in the 2004 Birthday Honours, for services to exports.
 
Ben was appointed as the CAA’s first International Director in November 2015, creating and leading the now established International Group with accountability for the CAA’s advisory and training arm, the CAA’s State Safety Partnership programme, engagement with international institutions such as the International Civil Aviation Organisation (ICAO) and the institutions of the EU.
Since 2012, Ben has also been a Director of Air Safety Support International (ASSI), the CAA’s wholly owned subsidiary organisation providing oversight of and support to the UK’s Overseas Territories.
 
Ben joined the CAA in 1998 following a career in gas turbine research and design for the UK Government and Roll-Royce.
 
  • Olivia Fahy, Head of Culture, TCC
Olivia joined TCC as Head of Culture in March 2021 to lead and develop TCC’s culture division. Olivia joined TCC from the FCA’s Culture Team within Supervision, having spent five successful years leading its Transforming Culture initiative. During Olivia’s tenure at the FCA, she engaged directly with financial services firms to drive and embed healthy, sustainable cultures across the industry.  

Prior to this, Olivia spent a number of years at the Financial Ombudsman Service, liaising with stakeholders to resolve high-profile policy issues. Olivia holds an MSc in Financial Regulation from Henley Business School.