John King, Ernst & Young Americas’ vice chair for assurance, wants to see more consistency from the country's audit regulator, the Public Company Accounting Oversight Board (PCAOB), and has called for a retooling of out-of-date quality control rules that are more in line with international standards.
“Because we run a global practice, we think as much consistency in the standards for looking at quality control or quality management in the audit firms, as much consistency as there can be, we’re supportive of it,” King said in an interview with Bloomberg Tax.
His comments come as the PCAOB is expected to send out a call for public feedback later this year on how it should modernize its quality control standard in an effort to raise compliance rates. Audit deficiencies currently stand at between 20 percent and 50 percent. The International Auditing and Assurance Standards Board is also working on changing its own compliance rules, releasing three draft rules earlier this year on how firms oversee quality for audits and additional assurance services.
King, who has been with EY for 17 years and oversees 20,000 employees, explained that the company's current top priorities “is expanding beyond the traditional financial statement audit,” which includes services such as assurance for blockchain, cybersecurity, and sustainability. With that in mind, EY has built a product to validate blockchains and is investing in artificial intelligence. In fact, the company has invested $600 million so far in technology, as well as training so that employees can effectively use these new tools.
“Tech isn’t where we are headed, it’s really where we are today,” King said.
But while technology can increase the efficiency of the audit, it doesn’t replace the need for professional skepticism or in-person visits.
“It’s also important to remember, though, that audit is more than just a narrow look at numbers,” he said.