EY has established a committee of outside experts to advise firm leadership on how to improve audit quality.
The firm appointed three individuals to its newly formed “Independent Audit Quality Committee,” including Jeanette Franzel, former member of the Public Company Accounting Oversight Board, and Charles Noski, former vice chairman of Bank of America. Chairing the committee is Bill McNabb, former chairman of Vanguard.
EY says the committee will advise its senior leaders in the United States on aspects of the firm’s business, operations, culture, talent strategy, governance, and risk management that affect audit quality. The firm says the three inaugural members of the committee bring “extensive, diverse, and highly relevant experiences” that will help the firm strengthen audit quality.
“We believe that gaining insight and advice from the IAQC will help us fulfill our important role of delivering high-quality audits that build confidence in the U.S. and global capital markets,” said Kelly Grier, chairman of EY’s U.S. business. Leaders at the Securities and Exchange Commission “have observed the benefits of independent and diverse thinking brought by outside leaders to support audit quality and the public interest,” she said.
Big Four firms have taken various steps to leverage outside expertise to address audit quality issues as inspection findings at the PCAOB have continued to raised concerns across the profession. Deloitte formed an “Audit Quality Advisory Council” in 2013, assembling external experts including another former PCAOB member and a former SEC staff member.
While Deloitte and EY chose to form panels, PwC and KPMG added independent members to their governing boards. PwC added a retired Navy vice admiral and former Kellogg chief executive to its board of directors in 2017, bringing its total number of directors on its U.S. governing body to 21. KPMG recently named a retired Air Force general to its board, although the firm does not disclose who is on its board, nor how many members it contains.