14 minute read 10 Sep 2020
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Creating long-term value for society

EY Romania
By EY Romania

Multidisciplinary professional services organization

14 minute read 10 Sep 2020
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EY creates long-term value through the work we do every day, and by helping to tackle some of society’s toughest challenges.

At EY we strongly believe that the things we do every day go a long way toward creating long-term value for society. 

For example, EY Assurance services help to foster confidence in the capital markets by delivering high-quality audits, and all EY services help to build trust, whether directly through the work EY teams do or indirectly through what that work allows others to achieve. 

That is why across the four service lines there is significant investment in recruiting, training and retaining highly qualified people in their respective disciplines.

EY people also make positive contributions to the public interest by playing important roles across business and in their communities as members of professional associations, by working with standard setters and participating on boards. 

In addition to what we do every day, we also believe that business has a role to play to help tackle some of the world’s toughest challenges particularly in a year when millions of people have had their livelihoods severely disrupted, or their careers and education put on hold.

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Chapter 1: Serving the public interest

Focus on quality

The role of EY auditors is to serve the public interest and provide confidence to the capital markets by providing high-quality audits. The Sustainable Audit Quality (SAQ) program is EY’s commitment to conducting globally consistent, high-quality audits sustained over time.

SAQ demonstrates EY’s determination to keep audit quality as a primary focus. It is the single most important factor in EY decision-making, and the key measure on which EY’s professional reputation stands.

EY is a strong believer in the multidisciplinary model – the skills and knowledge of EY people in other service lines provide the breadth and depth of technical skills and industry experience necessary to deliver high-quality, complex audits. It also gives EY the scale and resources to invest in cutting-edge technologies that are reshaping the way information is gathered and analyzed.

Part of the NextWave ambition is to create long-term value as the world’s most trusted, distinctive professional services organization. As such our goal is to be the most trusted auditor. 

We will measure this based on external inspections rates from IFIAR regulated countries, which include the Global Audit Quality (GAQ) working group (currently composed of 10 country regulators: Australia, Canada, France, Germany, Japan, Netherlands, Singapore Switzerland, US and the UK).  

The external inspection rates are based on deficiency rates, as defined by the respective regulator, based on the most recently completed inspections as some regulators have different inspection cycles, for public interest entities. We recognize that much of audit remains a human endeavor and, therefore, has an inherent risk of mistakes. Our ambition, however, is for EY audits to have no significant deficiencies.

External inspections

In 2015, the International Forum of Independent Audit Regulators (IFIAR) issued a challenge to the global audit networks, calling on them to achieve a 25% reduction in ‘‘deficient audits’’ – audits with at least one significant inspection finding – by 2019 for listed public interest entities. EY achieved this goal in 2019.

The IFIAR has issued a new challenge to the global audit networks, calling for another 25% reduction in deficient audits by 2023 for listed public interest entities across 25 countries EY is currently on track to meet that reduction. However, that metric is a point in time measurement and outcomes could change.

Internal inspections

Internal inspections are also performed on engagements each year. EY leadership conducts the annual Audit Quality Review (AQR) program as an important element of assessing the system of quality control at the member firm, regional and global levels. The results of the AQR process are summarized globally (including for Areas and Regions), along with any key areas where the results tell us that continued improvements are required. Below are the results:

* Such findings may result in the need for additional audit procedures or documentation. However, given their nature, these matters would not be expected to have a significant impact to the overall audit conclusion.

** Findings in procedures or documentation that are material to the financial statements or auditor’s reports, or were not performed in accordance with EY policies. 

An essential way in which EY manages risks and serves the public interest is to work continuously to improve the quality of all EY services. This includes and goes beyond the SAQ program.

Across the service lines, there is investment in recruiting, training and retaining highly qualified people in their respective disciplines. There is also investment in strong Quality functions and Professional Practice functions across geographies to advise, support and enable EY people, and to implement quality initiatives to a consistently high standard around the world.

These functions advise on client engagements in real-time, and operate EY’s global quality review program, which evaluates engagements for quality as well as compliance with EY policies and professional standards. Findings from the quality review program are reported to the Risk Management function and the Global Executive.

Quality is a fundamental strategic objective for the entire EY organization – it’s embedded as one of the six global performance metrics for all partners across all EY services and member firms. We regularly meet with regulators and standard-setters across the world to discuss EY business, emerging trends and opportunities to advance the quality of the audit profession, and EY auditors’ role in it.

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Chapter 2: Operating responsibly

Adhering to the highest ethical standards

EY strives to adhere to the highest ethical standards, including in relation to protecting human rights, upholding international labor standards, protecting the environment, and opposing bribery and corruption in all its forms. We are committed to integrating the United Nations Global Compact (UNGC) Ten Principles and the UN Sustainable Development Goals (SDGs) into EY strategy, culture and operations.

  • Human rights and labor

    All EY services play an important role in serving the public interest, promoting transparency, managing regulatory responsibilities and supporting investor confidence and long-term, sustainable economic growth.

    Specifically, EY Sustainability and supply chain advisory teams help organizations respond to modern slavery and human rights risks wherever they operate. Services such as EY Forensic & Integrity Services also use the latest developments in machine learning, natural language processing and robotic process automation to help clients detect and investigate instances of fraud, misuse, corruption and other forms of noncompliance.

    EY reports – such as the Global Integrity Report 2020 – give valuable insights on the risks relating to business ethics, personal conduct, third-party management and data integrity and how to tackle them.

    Internally, the EY Global Code of Conduct is a clear set of standards for business conduct and applies to everyone at EY, regardless of individual role, position or practice. It reflects our culture based on the EY values and purpose.

    EY cannot and will not tolerate behavior that is in violation of its professional standards or inconsistent with the EY Global Code of Conduct. Examples of such behaviors include discrimination, unethical practices, financial misconduct, deliberately jeopardizing quality of work or failing to adhere to EY policies.

    The Code was recently revised to reflect advancements in technology and how we use them, to reinforce the importance of upholding the Code, and to update the resources available to EY people to support decision-making.

    At EY we also recognize that our commitment to the UNGC Ten Principles and to advancing the SDGs extends to the suppliers we work with.

    Just as the EY Global Code of Conduct sets out the standards of ethical behavior expected of every EY person, the EY Supplier Code of Conduct does the same for EY suppliers. 

    The EY Global Supplier Code of Conduct outlines expectations around issues including human rights, modern slavery and child labor, and suppliers are asked to verify their adherence and standards at the RFP stage (and reaffirming at the time of contract execution).

    In addition to this, to monitor supplier performance a Supplier Portal provides EY procurement professionals with enhanced visibility of the capabilities of current and potential suppliers, including in relation to social and environmental policies, practices and certifications.

    The EY Climate Change and Sustainability Services (CCaSS) team has developed an Environmental, Social and Governance Risk Tool that provides an indicated risk across elements of sustainability including modern slavery and child labor for sub-categories of Procurement and suppliers. This is used to understand the level of due diligence that should be applied to a supplier and will be used to influence the questions asked of them. CCaSS is also using this data-driven tool to build the EY ‘‘Sustainable Sourcing Framework’’, which will act as a practical sustainable sourcing guide for Procurement.

    Suppliers complete a self-assessment questionnaire containing questions that cover their environmental, social and governance policies and projects; modern slavery; if they are ISO 14001 certified; and if they monitor standards in their supply chain.

    In addition to our focus on supplier due diligence, Procurement, Global Corporate Responsibility and Climate Change and Sustainability Services collaborate on a Human Rights and Modern Slavery Working Group to enhance EY’s work in this space. The group’s remit includes the development of modern slavery KPIs.

    EY Procurement teams are proactive in furthering social and environmental sustainability in the supply chain and have a dedicated Environmental Social Governance Services (ESGS) team that runs a cross-category Sustainability Network and Inclusiveness Network.

    EY’s commitment to promoting the principles of inclusiveness, sustainability and responsibility also extends beyond the EY organization to include the EY supply chain.

    We actively encourage small and diverse owned businesses to become registered suppliers, through our Environmental Social Governance Services portal. Working with advocacy organizations, EY provided over 17,161 hours of learning for 3,700 diverse supplier attendees in 2020 year-to-date to help them scale.

  • Environmental sustainability

    Protecting and regenerating the environment is an important issue for EY stakeholders and essential to sustaining long-term value creation. That’s why we’re proud to be the first global multi-disciplinary professional services organization to commit to carbon neutrality.

    While we continue to make our most valuable contribution as a leading provider of climate change and sustainability services to clients, the commitment to becoming carbon neutral by the end of 2020 is an important milestone in our own sustainability journey.

    Managing our own footprint

    As an organization that spans more than 150 countries, each with varying climate-related challenges and opportunities, achieving carbon neutrality requires a clear strategic framework. EY focuses on four interconnected pathways: reducing organic emissions, investing in carbon reduction and sequestration projects, purchasing renewable energy, and offsetting what cannot otherwise be avoided.

    The urgency of the climate crisis and the need to negate negative impacts as quickly as possible means that the use of offsets is inevitable in the short term. However, EY is committed to pursuing organic and systemic emissions reductions that can reduce reliance on offsets over time, as well as making sure that any offsets that are purchased meet high standards.

    In terms of organic reductions, our global carbon footprint shows that progress continues to be made. For example, as well as maintaining the downward trend in emissions from office energy consumption, an increasing proportion of that energy is also coming from renewables. This is a result not only of purchasing renewable electricity, but also supporting development of local renewable energy markets, such as through a Virtual Power Purchase Agreement (VPPA) in the US.

    Emissions from business travel have also reduced sharply – by 34% vs. FY19 – leading to a similarly significant reduction in overall footprint and emissions per employee. While this is largely due to COVID-19 travel restrictions, having illustrated a capacity to provide exceptional client service, even in the face of these limitations, EY is committed to seizing this opportunity to rethink service provision so that air travel does not rebound to pre-pandemic levels.

    In addition, in FY20 EY completed a WRI Aqueduct water risk assessment across 32 countries, representing 83% of the global organization. Of that sample, 65 offices, or 39% of the total, were deemed to be in high or extremely high water risks areas. The most prevalent risks identified were baseline water stress, untreated connected wastewater, and limited sanitation services. As a result of the assessment, 19 potential water management actions were identified for implementation. EY teams are currently implementing a management system that will help enable in subsequent years the reporting of mega liters of water withdrawn, mega liters of water consumed, and the percentage of each in regions with high or extremely high baseline water stress. 

    Helping EY clients become more sustainable

    Alongside efforts to reduce our own footprint, EY Climate Change and Sustainability Services (CCaSS) teams continue to help organizations assess, respond to, and measure and report on the most significant resource and environmental challenges they face.

    In particular, CCaSS teams have assisted clients in the areas of climate risk and adaptation, the circular economy, renewable energy, and water and waste management. Building on the legacy of the Embankment Project for Inclusive Capitalism (EPIC) report, which identified the value drivers important for sustainable and inclusive growth, the teams also continue to play a vital role in helping clients to generate and measure long-term value.

    Additionally, EY continues to contribute to the broader sustainability dialogue, including sharing global viewpoints on why COVID-19 could boost ESG performance and stakeholder capitalism, and how the EU Green Deal might redefine sustainable growth globally, accelerating transition toward a circular economy.

  • Anti-corruption

    EY is committed to the fight against corruption in all forms and to affirm this has established a Global Anti-Bribery & Corruption policy accompanied by an anti-corruption compliance program. Integral to the program is training and all EY member firm partners and employees are required to complete anti-bribery training.

    In line with a commitment to a culture of compliance, including playing its role within the profession to combat corruption and other forms of financial crime, EY continues to take a seat at the World Economic Forum’s Partnering Against Corruption Initiative (PACI) and has recently been appointed as the knowledge partner to the B20’s Transparency and Anti-Corruption working group.

    A steadfast commitment to tackling corruption is not only embedded in globally consistent policies and practices, including mandatory training on anti-bribery and corruption, but in the services we offer EY clients.

    For example, EY Assurance teams help clients strengthen their integrity and compliance frameworks; throughout EY we have invested in analytics solutions to help clients quickly sift millions of lines of data in order to highlight anomalies. And EY blockchain solutions help transfer data, currency and other assets in an efficient, trustworthy, transparent and secure way.

    Risk Management

    Internally, EY risk management teams work across the organization to help identify, monitor and manage risk, and enable EY professionals to meet their compliance obligations efficiently and effectively.

    They also give EY people the processes, tools and knowledge to take on the right opportunities; pull together the right teams; and offer EY clients the broadest range of services, in accordance with EY’s commitment to objectivity and independence.

    Risk management underpins sustainable business practices and relationships and ultimately helps clients innovate and build value and trust with their stakeholders through EY services. 

    An important element of risk mitigation and management in EY is data protection and information security framework. We protect information assets, personal data and client information, through their creation, transmission and storage, in accordance with the requirement of applicable laws, regulations and professional standards.

    Independence is also an integral part of the EY Global Code of Conduct. Each of us is responsible for our own personal independence and the independence of EY. We are mindful of our own personal financial interests and EY relationships with clients.

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Summary

At EY we strongly believe that the things we do every day – creating trust and confidence in the capital markets – go a long way toward creating long-term value for society. We also believe that business has a role to play helping to tackle some of society’s toughest challenges. 

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EY Romania
By EY Romania

Multidisciplinary professional services organization

Upvote