Our 2024 Audit Quality Report provides transparency, through the unique perspective of our leadership, into the health of our audit practice, actions we have taken to satisfy our quality objectives, and how the quality of our audits have measured up to expectations - including insights into over 20 quantitative transparency data points related to our culture, people, audit approach and technology, and quality monitoring.
Highlights from our 2024 Audit Quality Report
From our leaders
Assuming new roles as the US Senior Partner and US Assurance Leader, we are fortunate to lead an audit practice that is in a position of strength – with a reputation for delivering quality built over years by the hard work and achievements of our people and the skills and capabilities to be a leader of the profession and achieve even more.
Quality is – and always will be – our number one priority.
Our reputation for quality and integrity is vital to our ability to achieve our purpose, to build trust and solve important problems. Connecting with our stakeholders to share our perspectives on the health of our audit practice and the quality of our audits is one of the ways we build trust and reinforce our commitment to our purpose and values.
We hope you find this Audit Quality Report helpful and informative.
Our culture and values
- Our leaders prioritize the delivery of quality service. Quality, ethical behavior and accountability are regularly reinforced in communications. Our accountability framework specifies expected actions and behaviors, and includes consequences when exceptions occur.
- The most senior members of our Operating Committee, including the Senior Partner, Chief Operating Officer, Chief Commercial Officer, Chief Financial Officer, General Counsel, Assurance Leader, Tax Leader, and Advisory Leader signed income-at-risk provisions that are are expected to apply in circumstances such as pervasive and significant firm-level incidents, for example, significant breakdowns in the system of quality management.
- Our independence compliance programs consider independence in both fact and appearance and include systems and processes that support our people in maintaining independence. We've issued guidance to assist teams in mitigating the risk of violations in certain areas of our independence policy that we identified as more likely to involve complex, unusual, or unfamiliar circumstances, for example, voluntary and involuntary situations that could lead to a restricted client becoming unrestricted, and certain joint business relationships.
- If an independence exception occurs, we determine whether the firm remains objective and impartial and timely communicate the matter to our client.
- We accept or continue audit relationships only when supported by our assessment of business, litigation, and reputational risks and audit procedures can be satisfactorily designed and executed.
Our people experience
- Attracting, retaining, and developing top talent is fundamental to our ability to deliver quality. We’re committed to taking action that benefits our profession and builds the future talent pipeline and to maintain a meaningful people experience that supports development for our people and the skills to serve their professional goals.
- We continue to embrace more in-person time together to further support the development and needs of our people and enhance team collaboration.
- Our rewards strategy recognizes the growth and impact of the individual, including their contributions to delivering quality and value. We remain committed to proactively increasing base pay for our audit professionals when needed to align with our ongoing evaluation of market conditions.
- Partners are evaluated based on their contributions, inclusive of impact and quality. Our audit partners are not evaluated or compensated for selling non-audit services to their audit clients. The performance of other audit team members is assessed against dimensions guiding critical skills and behaviors related to delivering audit quality.
- Completion of required auditing; accounting; and annual independence, ethics, and compliance training is a component of individual performance.
Our audit approach
- Our audit teams are composed of individuals who bring the right blend of technical capabilities and industry knowledge.
- In FY24, we provided enhanced guidance, including helpful tools, working practices and examples, to facilitate the direction, supervision, and review of engagement team members and took additional, focused action to reinforce the professional skills of our new reviewers.
- Our fully integrated Acceleration Center (AC) audit team members perform an increasing amount of work in specific audit areas, allowing teams to appropriately scale and standardize work to enhance quality.
- Our audit teams utilize our broad network of multidisciplinary specialists to better understand the business, identify and address relevant risks, stay informed on developing matters, and obtain insights.
- Our National Office, Chief Auditor Network, and Quality Management Network also support our audit teams, so they do not have to go it alone. In FY24, our National Office addressed various auditing, accounting, reporting, and other practice matters – including, for example, Pillar Two, new auditing standards and rules for multilocation audits, new SEC cybersecurity disclosure rules, the Middle East conflict – through enhanced guidance and tools, additional training, and targeted reach-outs.
- Aura, our cloud-based audit platform, is used globally across all of our audits. Our audit tools and technology are designed to support leading audit practices based on the data and process maturity of our clients, and we continue to add innovative capabilities to drive quality and improve the audit experience. Our audit teams can access specialized tools to visualize and analyze, for example, full revenue populations at the transaction level.
- In FY24, we introduced multiple tools that leverage GenAI, including ChatNational, ChatPwC, and Microsoft’s M365 Copilot. We created comprehensive GenAI training and business rules regarding the appropriate use of GenAI in performing certain tasks. Collectively, our audit and Digital Assurance & Technology professionals have had approximately 37,000 hours of training on the use of AI.
Our approach to quality management
- Each member firm in the PwC Network is responsible for monitoring and continuously improving its system of quality management. PwC US partners receive information about the results of the Network inspection program to consider in planning and performing their audit work. We also assist member firms in promoting quality in audits performed under US auditing standards, for example by providing training materials and access to experienced resources.
- Our system of quality management is designed to meet the requirements of the PwC Network’s Quality Management and Service Excellence (QMSE) framework and the relevant quality control standards of the PCAOB, AICPA and IAASB, including International Standard on Quality Management 1 (ISQM1). The most recent annual evaluation confirmed that as of March 31, 2024, our system of quality management over our audit practice is designed appropriately and operating effectively to provide reasonable assurance that the quality objectives prescribed by the relevant quality control standards, including ISQM 1, and the PwC Network’s QMSE framework have been achieved.
- We monitor the quality of our US audits through various channels, including internal and external inspections.
- As a learning organization, we continue to focus on identifying and responding to opportunities for enhancement in a timely manner.
A snapshot of our FY24 transparency data points
97% of our audit professionals reported that they receive consistent messages about the importance of audit quality from leadership
Total average annual voluntary turnover decreased to 12.7%. Average annual overtime for our associates through directors also decreased.
We hired over 1,800 entry-level and over 50 experienced audit professionals, respectively, Total headcount increased to over 16,000 audit team members.
Less than 1% of the issuer annual financial statements audited by PwC in the past five years have been restated.
Average training hours per audit professional increased to 90.
201 audit engagements were subject to internal inspection with a compliance rate of 98%.
The ratio of partners/managing directors (MDs) in technical support roles to total partners/MDs increased to 1 to 5.7.
The ratio of partners/managing directors to all other audit team members (including ACs) decreased to 1 to 13.7.
10 audits (out of 57 audit inspections and one interim review inspection) were included in Part I.A of our 2023 PCAOB Inspection report (generally covering 2022 year-ends).
More than 100,000 auditors across the PwC Network use Aura.
The percentage of audit hours provided by specialists decreased slightly to 16.9%.
Our 300+ independence specialists conducted over 38,000 independence related consultations.
What is audit quality
- Audit quality means that we consistently
- Our audit quality principles are achieved through our audit quality practices
Audit quality means that we consistently
- comply with professional standards;
- exercise professional skepticism;
- use our experience to identify and resolve issues timely; and
- apply a deep and broad understanding of our clients’ businesses and the financial environment in which they operate in identifying and responding to risks relevant to our audit.
Our audit quality principles are achieved through our audit quality practices
Our audit quality principles are achieved through our audit quality practices and mean that we:
- ask tough questions;
- apply an objective and skeptical mindset;
- embrace the supervision and review process as a way to continuously improve;
- stay current on professional standards;
- have timely, meaningful exchanges with audit committees and management
- plan our work and resolve issues in a timely and thorough fashion
- remain alert for issues that need deeper analysis;
- act with professionalism; and
- take actions that recognize our role in the capital markets to contribute to confidence in the information provided by companies.
We have the right leadership, people and technical capabilities to achieve remarkable things. And we will be relentless in our pursuit of providing quality work across the firm.
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