Q&A: Deloitte’s deputy CEO and managing partner audit & assurance

Q&A: Deloitte’s deputy CEO and managing partner audit & assurance

The perception of audit has changed – and with it the market

Q&A: Deloitte’s deputy CEO and managing partner audit & assurance

It’s become easy to say that audit and assurance has changed a lot over the past few months, but considering how the functions have altered over recent decades casts a unique light on where the industry is today. To bring some context, we caught up with Stephen Griggs, Deloitte’s deputy CEO and managing partner audit & assurance.

Beginning his career at Arthur Andersen in 1987, Griggs became partner eleven years later – before moving to Deloitte with the firm in 2002. In 2015 he became UK leader of audit and assurance and from 2017 oversaw the business area in North and South Europe. He is a member of the firm’s global audit and assurance executive and in 2019 was appointed UK deputy CEO.

At heart though, he’s an auditor.

How do you feel your role in the firm has changed?

There’s certainly been more attention on the UK audit industry during the past few years than at any time in my career. The debate around the purpose and role of auditors in association with business failures, fraud, alongside the ongoing perception that auditors’ independence is clouded by conflicts of interest, has been heated to say the least. The evolving regulatory environment and impact of technology has also kept things moving at pace.

Being the leader of our audit and assurance business through this period of upheaval has been quite the journey. But the opportunity to support and enact the change needed is hugely important, Deloitte is committed to reform.

And how has the firm changed?

Significantly. Deloitte has grown and evolved not only just in audit and assurance, but across all our other businesses too – consulting, financial advisory, risk advisory, tax & legal.

The breadth and depth of services we offer always evolve over time, driven by client demand and the broader economy. It’s an important feature that supports the resilience of our audit practice and the wider firm.

Another big change has been the creation of Deloitte North and South Europe, which now combines our colleagues in 27 countries across the region. As clients operate in a more globally connected way than ever before, it helps us continue to provide seamless cross-border services and embeds quality consistently in all we do. It also creates opportunities for our people.

How has the audit function had to adapt over the past few months?

I feel like the word ‘unprecedented’ has been overused, but there’s few other ways to describe this period! If you’d told me this time last year that I’d be overseeing the firm’s audit work in 27 countries from home for the past five months, I’m not sure I would’ve believed you.

The pandemic has of course created substantial challenges for companies, as well as the policy makers, regulators and the firms that audit them. Remote stocktaking, heightened disclosures, evolving forecasts… The list goes on. We are working hard as a firm to ensure we continuously improve our audit processes, technologies and controls, both during the pandemic, and beyond.

Most of all though, I am immensely proud of how our auditors have responded. This has been a difficult period for everyone – where many are juggling multiple caring responsibilities at home, or feeling isolated from loved ones and colleagues – the situation is unique for each individual. People’s wellbeing needs to be at the forefront of any leader’s mind right now, as we adapt to whatever the ‘new normal’ will be.

And how do you expect it to change in the coming months?

The health and safety of our people and the businesses we work with remain a priority throughout the ongoing pandemic. We’ve long been a proponent of agile working and have had 20,000 people working from home safely and securely since mid-March.

We opened a small number of our offices in early July, with additional office openings being considered. However, our return to workplace strategy will continue to be guided by government guidance.

Do you think the audit reforms feel consistent with how the function has changed over recent years?

We’ve been consistent right from the start of the debate in our support for reform – we remain committed to playing our role in delivering change that enhances audit quality, improves choice and restores trust.

While there are some reforms that will require legislation, we also recognise that we must go further – to be more transparent about our audit business and continue to demonstrate that audit quality remains our absolute priority.

It’s also pretty clear from the audit debate that the current product is not meeting the needs of all its stakeholders. As described by Sir Donald Brydon, we agree audit should inform as well as assure, extending its scope to areas of broader public interest, not solely historic financial statements. This will be a big focus for us moving forward.

The market is undergoing transformation at present. How has Deloitte reacted?

We welcomed the recent clarity from the FRC on the principles of operational separation and continue working with them to develop our plans over the coming months.

However we were also clear that it must also be considered alongside a wider package of reform, including those recommended by Kingman and Brydon in vital areas such as corporate reporting, the role of directors and the regulatory environment in which we operate.

While delays to reform are perhaps understandable due to the pandemic, it’s crucial that we do not lose momentum, as the need for change is clear. I remain optimistic that an outcome can be reached that will go further towards meeting society’s expectations of the industry in the years ahead.

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