Ey 2022 Audit Quality Report

Our commitment
to audit quality
Information for audit committees,
investors and other stakeholders
Ernst & Young LLP
January 2023
Leadership Key focus A snapshot of Our commitment to Innovating and Our Supporting External
Monitoring Appendix
message areas in 2022 key metrics the public interest executing the audit people our teams inspections
Audit committees, investors and other stakeholders

We are pleased to present the 2022 audit quality report of Ernst & Retaining and supporting our people is vital to who we are as an
Young LLP (EY US or the Firm). employer and to sustaining audit quality over the long run. We are
committed to further strengthening our culture and maintaining an
Our commitment to audit quality is unwavering and motivates us to environment where our professionals can do their best work. Our
continuously improve. As leaders, we set clear expectations for all EY Way of Working allows our teams to determine the right mix of
our professionals about meeting our high standards for audit quality. in-person and remote work. We are also advancing our commitment
We also foster a culture of integrity, based on strong ethics and our to diversity, equity and inclusion (DEI) through initiatives focused on
shared values of respect, teaming and inclusiveness. career access, mentorship and dialogue.
Over the last couple of years, we have adapted to rapid changes We understand the enormous trust that is placed in us as auditors.
in the business environment. Like many entities, we have been We recognize that each of our audit professionals plays an important
challenged by the pandemic, the Great Resignation and other role in earning that trust, every day and on every audit. To help
significant macroeconomic trends. Based on our inspection findings, accomplish this, we continue to invest in our system of quality
our monitoring processes and other inputs, we have identified a need control, our processes and our digital innovation, including the EY
to drive greater consistency in our audit execution. In response, global organization’s $1 billion investment in next-generation audit
we have taken decisive and immediate action. We have enhanced technology that will be used by all EY member firms.
certain aspects of our approach to auditing information technology
(IT) controls. Recognizing the challenge of the remote working We recognize the need to constantly evolve to address the dynamic
environment, we are strengthening coaching and supervision by risks faced by the companies we audit and meet the expectations
executives, with a focus on audit execution, professional skepticism of investors and others in the financial reporting ecosystem. We
and project management. continue to engage with regulators and other stakeholders to
address key topics such as reporting on environmental, social and
We also have a multiyear transformation strategy. These efforts governance (ESG), cybersecurity and other technology-related
include simplifying and standardizing aspects of our audit approach, matters and to shape the audit of the future.
building centralized teams to provide audit support on various
topics, and embedding a continuous improvement mindset in As you may be aware, the partners at EY member firms are
our culture. We are also continuing to refine our digital audit evaluating a proposal to separate the firms into two distinct
approach, which our teams have been applying to develop a deeper multidisciplinary organizations. We want to assure you that if
understanding of the companies we audit. the transaction moves forward, EY US and the global network of
assurance firms will continue to have the necessary multidisciplinary
Many of our actions are designed to address the issues identified in capabilities to perform high-quality audits in the years ahead. As we
our Public Company Accounting Oversight Board (PCAOB) inspection consider our plans for the future, our people remain fully focused on
report in 2021 and the preliminary results for 2022, which each executing high-quality audits today.
show an increase in findings. We are focused on reversing this trend
in the current audit cycle (generally audits of periods ended 31 In closing, we embrace our responsibility to perform audits that
December 2022). While we recognize that we have work to do, we promote trust in the capital markets and investor confidence. From
are confident that the actions we are taking are the right ones. our most senior leaders to the most junior members of our audit
teams, all of our people are accountable for the quality of the Firm’s
We are also reinforcing the importance of executing every audit with audits. We continue to reinforce this message in our communications
objectivity and independence and acting with integrity in everything about driving greater consistency in audit execution and in our
we do, which are foundational to our ability to serve the public interest coaching and training.
by promoting trust and confidence in the capital markets. Learning
is also fundamental to the profession, and we are helping our people Please reach out to any of our partners or managing directors if you
make time for required learning and professional development. would like to learn more.
Julie A. Boland John L. King

US Chair and Managing Partner US Vice Chair — Assurance
Ernst & Young LLP Ernst & Young LLP
2 | Our commitment to audit quality

Monitoring Appendix
Reinforcing the cornerstones of

our audit culture: independence
and objectivity, integrity,
professional skepticism and Continuously
accountability innovating to attract,
Focusing on ESG,
cybersecurity and retain, develop,
other emerging topics support and inspire
our people
Continuing to Continuing to
strengthen our promote diversity,
Key focus
system of quality equity and inclusion
control
areas in 2022
Expanding our use of Enhancing our audit
data to manage risks approach to drive
in our audit portfolio greater consistency
Reinforcing the
Expanding our use
importance of project
of audit technology
management
Instilling a continuous
improvement mindset
on our audits

Monitoring Appendix
A snapshot of key metrics
Our people
10,750
US audit professionals by rank who are women Percentage of newly
promoted US audit
66%
3448+50 1328+36
US audit professionals, by rank
Partners and
11%
managing directors
Senior managers
and managers
Seniors and staff
23%
Partners and
managing directors
4 of the 7
Senior managers
and managers
34%
US audit professionals by rank who are racially and

ethnically diverse
13%
28%
36%
48%
Seniors and staff

50%
partners and managing
directors who are women
46%
or racially and
ethnically diverse
25%
partners who manage our audit practice at the regional
level are women or racially and ethnically diverse
Innovating and executing high-quality audits
Ratio of Quality Network and

Professional Practice partners
and managing directors to audit
Percentage of US public company audit
hours generated by EY US specialists
17.8%
1:6
partners and managing directors
10.7% 4.7% 1.4% 1.0%

IT Tax Valuation Other

Monitoring Appendix
Our commitment to
the public interest
We strive to continuously improve the quality
of our audits to protect investors and are taking
actions to drive greater consistency in the
execution of our audits. We are also reinforcing
the cornerstones of our audit culture: being
independent and objective, acting with integrity,
exercising professional skepticism and being
accountable for the quality of our work.
How we define audit quality We also understand the importance of providing

We are committed to performing high-quality audits, transparency about how we conduct our audits. In this
which we define as providing reliable and independent report, we describe the factors that drive audit quality for EY
audit opinions and informative communications that US and how we measure our performance at the individual
promote trust and confidence in financial reporting and partner level, the engagement level and firmwide.
the capital markets.
Leadership, tone at the top and mindset
As auditors, we understand and take seriously our We set a clear tone from the top that executing high-
important role in the financial reporting ecosystem, and we quality audits is our top priority. In their communications,
embrace our responsibility to serve the public interest. We our leaders reinforce the cornerstones of our culture —
view audit quality through the lens of the audit committees maintaining our independence and objectivity, acting with
and investors we serve, and we are confident that the integrity, exercising professional skepticism and being
actions we are taking will enable us to consistently perform accountable for the quality of our work — in addition to
high-quality audits, innovate the audit and strengthen our values such as respect, teaming and inclusiveness. All of
system of quality control. our audit professionals participate in quarterly quality
webcasts, and our leaders have clearly communicated
the importance of the actions we are taking to drive
consistency in the execution of our audits.
55 || Our
Our commitment to audit quality
quality
Monitoring Appendix
EY professionals in the US, like those at all EY member to the SEC in response to a voluntary request in June 2019
firms, are required to affirm their commitment to and that we should have updated that response.
upholding the EY Global Code of Conduct each year. The
Code stresses the importance of performing quality work, Our partners and managing directors are evaluated based
acting with integrity, maintaining our objectivity and on factors such as the tone they convey to their teams,
independence, and protecting confidential information, including their emphasis on the behaviors that contribute to
among other things. In the US, our professionals also sign audit quality, their level of consistent and direct involvement
a pledge to uphold the Firm’s values. In addition, all EY US in the audit, the results of inspections, achievement of
professionals and certain others affirm their compliance milestones on their audits and their mentoring activities.
with our independence policies each quarter, as discussed
below. All of our professionals are held accountable for
living our values and adhering to the Code of Conduct.
Meet our new Chair
After starting her career as an auditor and CPA, Julie
Our values: who we are worked in investment banking and then served as chief
• People who demonstrate integrity, respect, financial officer at public and private companies before
teaming and inclusiveness joining EY. She brings to our leadership team a deep
understanding of the role an audit plays in a company’s
• People with energy, enthusiasm and the courage
to lead ability to raise capital and the importance of operating
with ethics and integrity and upholding the values of the
• People who build relationships based on doing the
profession. Her commitment to investments in our people
right thing
and our audit process enables us to keep striving to
raise the bar on audit quality and contribute to trust and
We investigate potential violations of our Code of Conduct. confidence in the capital markets.
In June 2022, the Securities and Exchange Commission
(SEC) announced a settled order against EY US concerning
conduct that was discovered in an extensive internal
investigation and voluntarily shared with the PCAOB. The
order refers to incidents in the past of inappropriate and Our culture promotes performing
unacceptable answer sharing on continuing professional
high-quality work with integrity in
education and, by some individuals, on the ethics exams
required to earn or maintain a license as a certified public all of our audits.
accountant (CPA). Our response to this unacceptable
behavior has been thorough, extensive and effective. EY
Julie A. Boland
has reinforced our commitment that all of our people act
US Chair and Managing Partner
with integrity and ethics through training, communications,
ongoing monitoring and discipline. The order also states
that EY US failed to update information that was provided
66 || Our
quality
Monitoring Appendix
Our global organization The EY global organization’s Sustainable Audit Quality

EY US is a member of a global organization that is (SAQ) program remains a key focus for the audit
committed to conducting high-quality audits and requires practice at each EY member firm. The six pillars of the
each member firm to maintain a system of quality control SAQ program are tone at the top, people capabilities,
that meets high standards. This structure provides a simplification and innovation, audit technology and digital,
shared set of values for auditors at EY member firms enablement and quality support, and accountability.
around the world. It also enables large-scale investments
in technology, training and methodology that would be Auditors at all EY member firms are required to comply
difficult for member firms to achieve on their own. with the independence policies of the global network and
local firm and to confirm compliance each year with the
The EY global organization, in fact, recently committed Global Code of Conduct, as discussed above.
to invest another $1 billion over the next four years in
next-generation technologies for EY Assurance services,
including artificial intelligence, predictive analysis and Looking ahead
further integration of our existing suite of tools. While EY US and other member firms are evaluating
whether to separate their respective firms into two
Auditors at all EY member firms use the same audit distinct multidisciplinary organizations, we remain
technology and the same foundational audit methodology, focused on performing high-quality audits. Under the
and they are evaluated against common quality objectives. proposal the firms are considering, EY US and the
They are all supported by regional Quality Network and global network of assurance firms will continue to have
Professional Practice professionals, and the EY global all the capabilities and technical support required to
organization regularly tracks audit quality indicators at deliver high-quality audits and serve the public interest.
each member firm.
77 || Our
quality
Monitoring Appendix
Our system of quality control Independence and objectivity

Our system of quality control is designed to prevent and Independence from the companies we audit, in fact and
detect risks to audit quality. It’s also designed to promote a appearance, is foundational to our ability to provide trust
culture that emphasizes the importance of performing high- and confidence to the capital markets.
quality audits and accountability for the quality of our work.
We consider and evaluate independence with regard to
We continuously monitor our system of quality control and our people and EY member firms. This includes evaluating
enhance our policies, processes and documentation when the Firm’s financial relationships and those of our people;
necessary. We use data analytical techniques to evaluate employment relationships; business relationships; the
information about our audit practice and innovate how we permissibility of services we provide to companies we audit;
identify, manage and respond to audit quality risks. We also partner rotation requirements; fee arrangements; audit
monitor external risk factors and develop guidance and committee preapproval of our services, where applicable;
training to help our professionals address challenges such as and partner remuneration.
how to evaluate fraud risk factors in the current environment.
Our policies, which are more stringent than regulatory
Over the past year, we and all other EY member firms standards, prohibit all US professionals and certain others
continued to prepare for compliance with the International from owning a financial interest in any audit client. Further,
Auditing and Assurance Standards Board’s new quality we require our managers through partners to report
control standard that went into effect on 15 December securities they (and their immediate family members)
2022. We are also considering the changes the PCAOB hold and their other financial relationships in the EY
recently proposed making to its quality control standards. Global Monitoring System, which initially assesses and
then monitors the permissibility of the investments and
arrangements. Managers through partners are required to
have automated daily feeds from their brokers to keep their
records up to date.
We continuously review and enhance our quality control processes

to detect and prevent risks that impact audit quality.
John L. King
US Vice Chair — Assurance
88 || Our
quality
Monitoring Appendix
In 2022, we enhanced our Global Monitoring System to

better enable professionals to comply with their obligation
to report their financial relationships. We are emphasizing
the importance of compliance with our policy on reporting
financial relationships and interests in our messaging to
our professionals, and we have set aside time for them to
complete the necessary reporting. We have also raised the
financial penalties for incomplete or inaccurate reporting.
We have 49 partners and managing directors in our EY US
independence group to support our audit teams.
All EY US professionals and certain others are also required

to confirm compliance with our independence policies and
procedures each quarter. In the most recent reporting
year, we tested more than 2,600 US partners and other
professionals for their compliance with our independence
policies, as part of our firmwide system of quality control.
Our policies require that audit teams communicate

with audit committees at least quarterly to affirm their
independence and describe matters that may bear on
independence. Our policies also address how we compete
for audit work, including both new business and proposals
to continue auditing a company we currently audit, and
how many years certain of our professionals can work on a
particular audit.
99 || Our
quality
Monitoring Appendix
Independent advice on audit quality

Leaders of the Firm meet regularly with our Independent internal and external inspection results and other audit
Audit Quality Committee (IAQC) and seek the IAQC’s quality indicators, our readiness to comply with the new
feedback and advice about aspects of our business, international standard on an audit firm’s system of quality
operations, culture, talent strategy, governance and risk management, key changes we are making to our processes
management that affect audit quality. The IAQC was created to enhance audit quality, and governance and succession
in January 2019 and comprises external leaders with matters. In addition, our discussions have focused on what
extensive experience in the financial reporting ecosystem. the proposed changes to the reporting requirements for
climate-related matters and cybersecurity matters will
These independent experts provide actionable advice and mean for the Firm and the profession.
valuable insights we use in our decision-making about
how to continue to improve audit quality. For example, we We are completing the process of filling a vacancy on the
have held robust discussions with the IAQC over the past IAQC that was created when the IAQC’s inaugural chair,
year about our talent strategy, our digital transformation, F. William (Bill) McNabb III, completed his term.
IAQC member Jeanette M. Franzel is IAQC member Dina Dublon is a former

a CPA, a former board member of the chief financial officer at JPMorgan Chase
PCAOB and a former managing director & Co. and currently serves on the boards
at the Government Accountability Office. of directors of PepsiCo, T. Rowe Price
She is currently a board member of the and Motive Capital Corp II.
North Carolina Association of CPAs.
We believe our advice helped EY US shape the The IAQC’s input is especially valuable to me. I am
strategies it is implementing to enhance audit quality focused on enhancing our audit quality, and the IAQC
in both the short term and long term. provides me with an independent perspective on key
topics that impact audit quality. I expect to continue to
Jeanette M. Franzel — IAQC member
benefit from their advice and insights on a variety of
Dina Dublon — IAQC member
topics, including emerging issues that affect financial
reporting and the profession.
Julie A. Boland — US Chair and Managing Partner
10
10 || Our
quality
Monitoring Appendix
Engagement with stakeholders

Our leaders actively engage in discussions with regulators topics in addition to publishing analyses of governance
and standard setters such as the SEC, the PCAOB and the data on US public companies. Our Audit Committee Forum
Financial Accounting Standards Board (FASB) to share our aims to inform and educate audit committee members on
perspective on emerging issues that impact audits and financial topics such as climate-related disclosure and other ESG
reporting. We weigh in on rulemaking and standard setting, matters, cybersecurity and data privacy. In collaboration
which we believe is a critical part of our efforts to promote with Tapestry Networks, EY US sponsors networks of audit
meaningful financial reporting and high-quality audits. committee chairs representing more than 250 companies.
They meet regularly to discuss their work and sometimes
For example, we continue to engage with the SEC as it engage with experts, regulators and policymakers.
considers requiring companies to disclose their greenhouse
gas emissions and other matters relating to climate change Information security and privacy
and to make more robust disclosures about cybersecurity Member firms in the EY global organization use a globally
incidents, risk management and governance. We also consistent and regionally based approach to information security
continue to engage with the FASB as it considers standard that incorporates aspects of people, process and technology
setting on accounting for environmental credits, digital in how we protect information and technology assets.
assets and other topics.
EY US maintains robust information security and data privacy
We also share our views with investors and other groups that programs, consistent with industry standards and applicable
are interested in financial reporting. For example, we engage legal requirements, designed to protect against unauthorized
directly with investors to promote an understanding of the disclosures of data and attacks on our network.
audit and to exchange views on current corporate reporting
topics. Through our global organization, we also provide One of the most important elements of our strategy is
input to groups, such as the International Sustainability maintaining a security-aware culture enabled by training
Standards Board, that are seeking to standardize the and risk management communications. We provide annual
disclosures companies make about ESG matters. training focused on the latest security risks, including tests
of whether our people can identify phishing emails.
We also issue thought leadership publications aimed at
improving the quality of financial reporting. Over the Safeguarding the confidentiality of the information we
past year, we addressed topics such as accounting for receive from the companies we audit is critical. Data is
transactions and arrangements related to climate change transferred using industry standard solutions designed
initiatives, accounting for digital assets, accounting to securely transfer large files between EY US and the
and financial reporting considerations related to companies we audit. The EY Canvas Client Portal also
macroeconomic factors, and accounting for the direct and provides a secure platform for communication and file
indirect effects of the war in Ukraine. transfers between the companies we audit and our audit
teams. Client data is encrypted, both during transfer and
The EY Center for Board Matters publishes articles and while at rest.
hosts webcasts to help board members address complex
11
11 || Our
quality
Monitoring Appendix
Looking ahead
Cybersecurity ESG
With cyber attacks on the rise, our partners proactively We are sharing our perspective with the SEC and other
engage management and audit committees at the regulators on which climate disclosures would provide reliable
companies we audit in discussions about the heightened information to investors. Our auditors are prepared to
risks. We also provide our audit teams with guidance provide assurance on greenhouse gas emission disclosures,
so they can assess the effects of cyber incidents when and we have shared our recommendations for improvements
they arise and adjust their audit plans as necessary. We to climate-related disclosures the SEC has proposed
generally support the SEC’s proposal to require public requiring. We believe certain disclosures about greenhouse
companies to make more robust disclosures about gas emissions and other material climate-related matters
material cyber incidents and to provide disclosures would be useful to investors because they address long-
about their cybersecurity risk management and term value. We already offer a separate service of providing
governance. In addition, we continue to offer the assurance on a company’s voluntary ESG disclosures, and
companies we audit separate cyber-related services our sustainability specialists advise companies on reporting
that provide an independent and objective assessment on these topics. Senior members of our audit teams are
of the company’s cyber risk management activities to also proactively helping management and audit committee
support board and management oversight of this issue. members understand the evolving ESG reporting landscape.
Future of the profession

We continue to engage with high school and college students to generate excitement about careers in auditing. We explain
that EY auditors have opportunities to use cutting-edge technology, specialize in auditing certain complex areas, and be at
the forefront of reporting on emerging topics such as ESG matters and cybersecurity. Our goal is to make a career in auditing
attractive and more attainable for a larger group of professionals, and we are taking the following steps:
Through our EY Career Path We’re developing a pipeline of We are working with the Center for
Accelerator program, we’re racially and ethnically diverse Audit Quality to generate excitement
expanding access to a career as a accounting professionals through about the profession among both
CPA by providing our interns with a our partnerships with organizations racially and ethnically diverse
way to earn the extra college credits such as the National Association individuals and those with a degree
they need to meet the licensing of Black Accountants and the in accounting and a major or minor
requirements and, in many cases, Association of Latino Professionals in data analytics, management
providing need-based scholarships. For America. information systems or computer
information systems.
12
12 || Our
quality
Monitoring Appendix
Innovating and
executing the audit
Our data-first approach and innovative
technology help us drive audit quality
and execute our audits with objectivity
and professional skepticism.
Our focus on consistency the audit, including potential fraud risks, that arise during
We are laser-focused on driving consistency in how we the year. It allows us to see trends and anomalies and
apply our audit methodology, how we manage our audits understand how anomalies occur and how prevalent
and how we use innovative technology. To do that, we have they are.
clarified our methodology in certain areas, simplified and
standardized aspects of our audit approach, and created Our US public company audit teams use our digital audit
centralized teams that provide audit support on specific methodology to enhance their risk assessments for all
topics. We are also placing a greater emphasis on timely significant accounts and key business processes. That
supervision by executives, project management means they start their audit planning with a full population
and accountability. of data about the company’s transactions recorded in
the general ledger. They also used data-driven audit
Our data-first mindset procedures to better understand key business processes
Our data-first approach enhances audit quality because and to obtain substantive audit evidence for many of the
our teams see the big picture and focus on the key risks in company’s account balances.

Monitoring Appendix
EY Helix analyzers for use on all financial statement audits

Consolidated trial balance General ledger Subledger
• Scoping for multilocation • Used to identify • Trade receivables • Payroll
audits anomalies in journal • Trade payables • Property, plant
• Interim review entries • Inventory and equipment
Starting with data gives us a better understanding of how Our newest general ledger analyzer provides enhanced
transactions are processed. By evaluating data and applying visualizations, including highlighting changes in the data
professional skepticism and judgment, we can better identify from the previous year, and allows team members to quickly
changes in processes and unusual journal entries that require drill into the data so they can discuss it in real time with audit
follow-up than if we used traditional sampling techniques. team executives. It also allows our teams to analyze very large
populations of data from the companies we audit. In addition,
As a result, we are asking better, more timely questions the analyzer helps our teams identify significant or unusual
of management and improving the experience for our patterns in journal entries, grouping them by combinations
professionals. Management of the companies we audit also of characteristics, such as the same posting details.
benefits by spending less time pulling documentation of
transactions and answering basic questions. In some cases,
management gains new insights into the company’s processes
We continue to maximize our use of
or operations based on information we share with them.
data and technology. Our teams are
building on the knowledge they have
EY Helix data analyzers
gained by working with data, and they are focusing
We have a robust library of EY Helix data analyzers that our
on changes that may indicate new risks.
teams use to perform risk assessments, identify anomalies
and obtain audit evidence. They include our EY Helix
William R. Strait
general ledger analyzers and our subledger analyzers. US Deputy Vice Chair — Assurance
Sector-specific analyzers
• Investment analyzer • Premiums and claims non-life insurance analyzer
• Lease revenue analyzer for lessors of real estate • Mortgage loan analyzer
• Health revenue analyzer • Commercial loan analyzer
• Life sciences gross-to-net analyzer • Automotive warranty liability and expense analyzer

Monitoring Appendix
We believe a data-driven audit is a higher-quality audit. It allows us

to ask better questions in team meetings and in conversations with
management of the companies we audit.
Cale L. Whittington
US Assurance Digital Leader
We also have sector-specific EY Helix data analyzers that We evaluate the latest technology businesses are using
help our teams evaluate transactions and metrics that are and develop tools to address new issues that may arise.
unique to the company’s industry. These analyzers are often For example, our blockchain analyzer gathers a company’s
developed by EY auditors who want to address the needs of cryptocurrency transaction details from public blockchain
their own teams that aren’t addressed by existing analyzers. ledgers using public addresses supplied by the company
We then test the analyzers and certify them for use by and reconcile the data with the company’s records. The
other US teams auditing companies in the same industry. latest version of the analyzer has a digital signature
verification feature that allows companies to demonstrate
The general ledger, subledger, transaction and sector- ownership of digital wallet addresses without needing to
specific analyzers can be used to perform risk assessments move cryptocurrencies.
and a variety of substantive audit procedures.
The analyzer supports data for five blockchains: Bitcoin,
We also have a robust pipeline of ideas in development to Bitcoin Cash, Litecoin, Ethereum and Ethereum Classic.
create new tools, and we encourage our professionals to
continue to innovate.
We use the latest data analytic technology in

our audits. This gives us more insight into
companies that use cutting-edge technology
and analytics to manage their operations and
results in a higher-quality audit.
Jeffrey Lang
Partner in charge of a large
multinational public company audit

Monitoring Appendix
EY Canvas audit platform confirmation process, including sending digital requests,

All EY US teams use our cloud-based audit platform, EY tracking responses and reconciling confirmed balances to
Canvas, to apply the EY global audit methodology and the company’s records.
manage day-to-day audit work. This global platform helps
our teams track their progress and review the work of We also have solutions that populate certain information
auditors from other EY member firms who participate in from our EY Helix Analyzers into workpaper templates to
multinational audits. Our teams also use the EY Canvas help our teams document their work consistently.
Client Portal to communicate securely with the companies
we audit. Teams can use our EY Canvas Smart Automation to create
Intelligent Checklists that help streamline the preparation
EY Canvas is designed to help our teams manage their and review of financial statement disclosure checklists,
audits more effectively and reduce the effort required to among other things.
perform administrative tasks. Our teams can easily track
their progress against key audit milestones, view the key
risks they identified and track the audit procedures they
planned so they can more easily see whether key risks have I feel fortunate to work at a firm that invests
been appropriately addressed. in analytical tools I can use to perform audit
procedures and get a better understanding of
The EY global organization continues to make
what’s happening at the company I’m auditing.
enhancements to add functionality to EY Canvas. For
example, the Canvas engagement dashboard was recently This gives me the confidence to discuss what
enhanced to make it easier for team members to see the I’m seeing in the data and contribute valuable
tasks that require attention. insights to the team.
Automation
We continue to automate aspects of the audit to improve
audit quality by collecting evidence and enhancing project Lexi M. Ott
management to allow our people to focus on higher-risk Audit senior
areas of the audit. For example, our custom confirmation
solution allows teams to automate parts of the

Monitoring Appendix
Working with the right companies made by the team. The engagement quality review is an
We focus on making sure the companies we audit share important element in our system of quality control.
our commitment to quality and transparency in financial
reporting, and we do not pursue audits of companies The factors we consider when we assign partners to
that do not share our values. Every year, there are many these roles include data about their workloads and their
companies we decline to audit. experience with both the industry and public companies,
their skills and the SEC’s partner rotation requirements. We
We perform rigorous risk assessments and obtain also consider the company’s risk designation identified in
approval from regional leadership before we accept our firmwide assessment process.
audit engagements and then again annually to continue
our audit work. These assessments help us identify the About 63% of our audit partners serve as the partner in
companies we want to audit, considering factors such charge of a public company audit. If audit partners who
as management’s integrity and approach to meeting its serve as engagement quality reviewers on public company
financial reporting responsibilities, the company’s financial audits are included, the percentage rises to 82%.
condition and the strength of its audit committee.
Our other audit partners help manage our public company
As part of the process, which is an important element audits or serve in quality or leadership roles, or as partners
in our system of quality control, we develop an overall in charge of private company audits. We have additional
risk designation for each audit. It is based on the risk partners on 33% of our public company audits to assist the
factors specific to the company, which might include partner in charge of our larger and more complex audits.
risks associated with adopting new accounting standards,
entering into a business combination, going public, To make sure our partners have enough time to lead quality
accounting for complex income tax matters, and holding audits, we review their workloads semiannually and when
and/or transacting using digital assets, among other factors. the scope of an audit changes significantly due to a major
transaction or when there is significant turnover on the team.
Throughout the audit cycle, our teams reassess risks using We perform a comprehensive annual review of each team to
evidence they gather from their audit procedures. We also make sure we are staffing our audits with audit professionals
alert our teams about fraud risk indicators such as short and specialists who have the right skills and capacity to
selling and adverse news reports. execute quality audits, given the risk factors identified in
each engagement. We also monitor the composition of our
Establishing the right team teams throughout the audit and determine what actions to
Each public company team has a partner in charge, who take to respond to potential audit risks.
sets the tone and has overall responsibility for the direction,
supervision and performance of the audit. On all public We believe that timely executive involvement is a key driver
company audits, another partner serves as engagement of audit quality, and we track and evaluate hours incurred
quality reviewer and evaluates significant judgments by managers and above at various points during the audit.

Monitoring Appendix
The right skills Percentage of US public company audit hours

generated by EY US specialists
17.8%
We include in our audit teams EY professionals who focus
on tax matters, IT and valuation matters, and, in certain
audits, forensic accounting. Having specialists in these
areas collaborate with our audit professionals helps us
deliver high-quality audits at a time when IT environments,
business models, transactions and worldwide tax regimes
are increasing in complexity.
In fiscal 2022, EY US specialists, who are members of our 10.7% 4.7% 1.4% 1.0%
audit teams and are highly valued by EY, accounted for a
total of 17.8% of our US public company audit hours, which IT Tax Valuation Other
is consistent with 2021. IT specialists accounted for 10.7%
of US public company audit hours. Tax, valuation and other
specialists’ time represented 4.7%, 1.4% and 1.0% of total the specialists who work on our teams. In fiscal 2022,
US public company audit hours, respectively. these professionals accounted for 20% of US audit hours,
compared with 18% the previous year.
In some cases, our specialists may spend considerably
more time working on audits than these percentages In the US, we are driving consistency in our approach and
indicate, depending on the complexity of the audit. For documentation by building centralized teams that provide
example, our IT specialists typically spend more time audit support on various topics. Our Service Delivery
auditing internal controls when the company has a more Center (SDC) currently supports audit teams by performing
complex IT environment or performing procedures related routine independence procedures such as reviewing the
to cyber incidents. As part of our collaboration, we involve services we provide to a company we audit and making
our IT specialists early and often in the audit to develop sure they are all pre-approved. Having individuals who
and execute the audit plan. specialize in performing these procedures frees up our core
audit team members to spend more time on other areas of
EY US and other members of the EY global network the audit that require more judgment.
will continue to have the outstanding multidisciplinary
capabilities to support our audits now and in the years We are also developing US-based groups to support our
ahead, even if the member firms separate into two teams in certain areas of the audit that require judgment
distinct organizations. or pose a higher risk. Specially trained auditors in these
groups will perform key procedures related to certain
Offshore professionals who support the EY global complex topics, in close collaboration with engagement team
organization perform certain audit procedures and other members, as well as more-complex independence procedures
tasks under the supervision of our US audit teams and such as researching potential independence conflicts. We
are prioritizing the development of these groups.

Monitoring Appendix
Managing the audit partners and other audit executives, use EY Canvas to
We believe that timely pacing of the audit and strong track the progress of their audits and completion of tasks in
project management, including timely supervision and real time. This visibility enables executives to provide more
review by audit executives, are important drivers of audit targeted supervision and to better identify team members
quality. Our experience indicates that teams that complete in need of coaching.
their work at the appropriate time, including reviews by
audit executives, execute higher-quality audits. Over the past year, we stressed the importance of a
continuous improvement mindset to further enhance
We emphasize the importance of project management audit quality. Our teams use Lean Six Sigma principles to
through our milestones program, which promotes discipline manage their audits more effectively so they can focus on
and timely executive involvement by focusing our teams on the risks that matter most in each audit, eliminate rework
completing procedures, documentation and reviews by a and drive greater consistency in our audit execution.
specified date for key phases of the audit. We have enhanced
how we analyze real-time data for our milestones program, Cybersecurity
which helps us proactively reach out to teams ahead of Cyber risks are a major threat to businesses. A breach of an
deadlines and provide additional support when necessary. organization’s systems can disrupt operations, significantly
To facilitate timely reviews, we also require our teams to set increase costs and harm an organization’s reputation.
specific executive discussion and approval points throughout
the audit cycle to make sure the partner in charge holds On every audit, we obtain an understanding of a company’s
discussions with the right people at the right time. processes and controls that relate to IT and are relevant
to the audit. We also perform procedures to understand
While a significant amount of audit work needs to management’s approach to identifying, evaluating,
be completed at or after a company’s year-end, our investigating and communicating cybersecurity breaches. If
milestones program helps our teams perform as many information about a material breach is identified, we consider
tasks as possible before that busy period. Performing work the effect on the financial statements, including disclosures,
earlier in the audit cycle gives teams more time to address and the effect on internal control over financial reporting.
any issues that arise before the year-end crunch.
EY US also offers the companies we audit separate cyber-
In fiscal 2022 (mostly audits of 2021 financial statements), related services that provide an independent and objective
our teams performed 36% of their work three months assessment of a company’s cyber risk management
before the company’s year-end and 62% of their work activities to support board and management oversight of
before the company’s year-end. Our teams, including our this issue.

Monitoring Appendix
EY digital audit technology

Our digital technology enables audit teams to perform the digital audit
using a secure platform. Our suite of analyzers helps teams analyze data
with advanced and emerging technologies.
Click on
the tools to
learn more.
EY Canvas
EY Canvas EY Canvas EY Smart

Dashboard Client Portal Automation
EY Helix Data
EY Atlas
Analyzer Library

Monitoring Appendix
Our people
Our people are essential to our ability to
execute high-quality audits. We focus on
creating diverse teams of audit professionals,
supporting their wellbeing and providing
them with career development opportunities.
Putting our people first importance of having a continuous improvement mindset.

Our hybrid model of remote and in-person working that we Our people are also gathering in person with EY leaders to
call the EY Way of Working, or EY WoW, requires our teams celebrate their achievements. For example, we hosted our
to consider the needs of the companies we audit and their celebration for newly promoted audit executives in person
personal needs to determine when and where to work. this fall for the first time since 2019. We are also returning
to in-person learning.
It allows us to continue performing high-quality audits while
providing predictable flexibility for our people. It also enables We continue to enhance the experience of working at EY
us to provide more opportunities for our professionals to US and empower our people to innovate. We held our
work on engagements outside their geography. first-ever Assurance Super Day in June 2022 to discuss
new career opportunities in our audit practice and offer
We are focusing on making sure our teams use their time opportunities to learn more about the investments we
together for activities that are most impactful in person, continue to make in our people and their benefits.
such as engaging with management of a company we
audit at critical points in the process and getting together
as a team to reinforce our culture and emphasize the

Monitoring Appendix
We remain focused on creating the right opportunities to help our audit professionals
develop and providing them with experiences to become tomorrow’s leaders.
Rebecca A. Burke
US Assurance Talent Leader
Highlights of our benefits
Time off Emotional wellbeing

• 19 paid holidays, including week-long breaks in • $1,000 annual reimbursement for wellbeing
summer and winter activities that now include travel in addition to
• A flexible vacation policy that allows our fitness and health activities
professionals to decide how much vacation they • Fitness discounts and access to top-quality fitness
need centers at reduced rates
• Free counseling for our people and their families
(25 sessions per family member)
• Mindfulness community group sessions
Physical wellbeing Daily-life resources

• $50,000 in lifetime family-building support for • 24 days of subsidized backup child/adult or self-
EY professionals and their dependents (up from care, up from 12 days before the pandemic
$25,000) • $800 annual reimbursement for child/adult/pet
• Immediate eligibility for 16 weeks of paid care or commuting expenses
parental leave • Coaching for new parents returning to work
• Reimbursement of up to $50,000 for eligible • Assistance to navigate the college application
gender affirmation care process
• Access to a free second opinion

Monitoring Appendix
To promote a sense of belonging, we assign our audit recommend nonprofit organizations or contribute
professionals to small groups, which we call EY Circles, so funding to organizations focused on addressing inequity,
they can meet several times a year to discuss matters that discrimination or racism. The fund builds on our existing
impact them. We have over 350 of these circles in the US and longstanding corporate responsibility efforts to
audit practice. address the root causes of social injustice.
Corporate responsibility and social equity initiatives Leveraging diversity and promoting equity and inclusion
EY US continues to promote equity inside our organization Diversity, equity and inclusion are key pillars of the US
and in our communities. By leveraging the power of our Firm’s strategy and commitment to delivering high-quality
people and collaborating with like-minded organizations, audits. We believe diverse perspectives, combined with
we aim to solve societal challenges facing our world today. an equitable and inclusive culture, drive better decision-
making, stimulate innovation and increase our agility.
Through our Bridging the Digital Divide initiative, we
collaborate with other organizations to help provide We also foster a sense of belonging for all of our people by
underserved populations with devices and broadband access, making sure everyone’s voice is heard. We staff our audits
as well as mentors so they can develop the necessary skills with diverse teams and sponsor nine professional networks
to participate in the digital age. Our College MAP program that provide opportunities to bring our diverse workforce
matches underserved students with EY mentors who help together for connections, support and engagement. One
them navigate the path to higher education. example is Unity, our professional network supporting
lesbian, gay, bisexual, transgender and other professionals
We also provide pro bono services to impact entrepreneurs (LGBT+) and their allies.
who use business as a force to address poverty, inequality
and environmental issues, among other things. And, each We are committed to attracting and developing women and
year, thousands of EY people team with Earthwatch to racially and ethnically diverse professionals and recognize
combat climate change and environmental injustice. individuals who serve as role models and sponsors, live our
values and demonstrate inclusive leadership.
Another way we effect change is through the EY
Social Justice Fund, a platform where EY people can

Monitoring Appendix
Percentage of newly promoted audit partners/managing Percentage of newly promoted audit partners/managing
directors who are women directors who are racially and ethnically diverse
In 2022, 46% of the audit professionals we promoted to ranks, our retention rate for women was consistent with
partner or managing director were women and 25% were our overall retention rate of 73%, but our retention rate for
racially and ethnically diverse (R&ED). R&ED includes R&ED professionals in this group was slightly lower.
individuals who identify as American Indian/Alaskan Native,
Black or African American, Asian, Hispanic or Latinx, We also monitor the percentage of partners and managing
Native Hawaiian or other Pacific Islander, or two or more directors in leadership positions who are women and R&ED
races or ethnicities. professionals. In 2022, 28% of the partners in charge of
public company audits were women and 11% were R&ED,
In our campus hiring, 50% of our recruits in fiscal 2022 up from 25% and 8% two years earlier, respectively. The
were women and 40% were R&ED. percentage of women and R&ED partners who lead our
most complex multinational public company audits is also
Our retention rates for both women and R&ED professionals rising. We expect women or R&ED partners to lead 30% of
at the senior manager/manager ranks exceeded our overall these audits for periods beginning in 2023, up from 28%
retention rate of 74% for these ranks. At the senior/staff two years earlier.
DEI in our leadership

• Four out of the seven partners who manage our audit practice at the regional level are women or
R&ED professionals.
• Ten of the 15 current members of our US Executive Committee are women or R&ED professionals.
We are proud of the recognition we have received for our efforts, including recognition from DiversityInc, a leading source
of business information on diversity management.

Monitoring Appendix
We are actively pursuing the Management Leadership for

Tomorrow (MLT) Racial Equity at Work Certifications. We
In 2022, we were once again recognized reached plan-approved status for the Black Equity at Work
as a member of DiversityInc’s Top 50 Hall Certification, a key milestone in our journey to be a more
equitable, inclusive workplace for Black professionals. We
of Fame made up of companies that have
are also among the initial launch employers pursuing the
achieved a No. 1 ranking in its annual list of Hispanic Equity at Work Certification. These certifications
Top 50 Companies for Diversity. We were focus on five core pillars: representation at every level,
compensation equity, workplace culture, business
also recognized on several of DiversityInc’s practices, and contributions and investments.
2022 specialty lists, including mentoring
Percentage of women in our US audit practice
and sponsorship, where we continued to
2022 2021 2020
hold the No. 1 spot. Partners and managing
34% 32% 32%
directors
Senior managers and
48% 48% 47%
managers
Seniors and staff 50% 49% 47%
Other DEI accolades we have received
Total 47% 47% 45%
• Seramount (formerly Working Mother) — 100 Best
Companies (Hall of Fame, Top 10)
Percentage of R&ED professionals in our US
• Seramount Inclusion Index — Pinnacle Inclusion audit practice
Index Organization 2022 2021 2020
• Human Rights Campaign Corporate Equality Index Partners and managing
13% 12% 11%
directors
— “Best Places to Work for LGBTQ+ Equality”
(100% rating) Senior managers and
28% 27% 28%
managers
• Disability Equality Index — Best Places to Work
Seniors and staff 36% 34% 33%
(100% score)
Total 32% 30% 29%
We are committed to building a robust pipeline of exceptional leaders who

will continue to strengthen our diverse, equitable and inclusive culture.
Sangita Kasturi
US Assurance Diversity, Equity and Inclusiveness Leader

Monitoring Appendix
The right people at the right time Number of US audit professionals (on a full-time
We continuously analyze macroeconomic data and equivalent, or FTE, basis)
information about our audit practice to forecast the Fiscal Fiscal Fiscal
number of people at each rank we will need to deliver 2022 2021 2020
high-quality audits. Geography is no longer the key Partners and managing
1,159 1,142 1,181
directors
consideration. Our professionals can now work remotely
Senior managers and
on audits in other locations, and we’re incorporating this 2,458 2,575 2,564
managers
flexibility into our planning. Seniors and staff 7,133 7,218 7,325
Total 10,750 10,935 11,070
We have a process to identify partners with high potential
so we can make sure they have the experiences they need
to move into leadership roles, such as leading our most The table above does not include offshore professionals
complex and challenging multinational audits. who support the EY global organization. The number of
hours these professionals worked on US public and private
We recognize and reward our top performers to help company audits was the equivalent of having another
us retain professionals with the skills and experience 2,618, 2,291 and 2,064 full-time auditors in fiscal years
to perform high-quality audits. We also promote top 2022, 2021 and 2020, respectively.
performers when they’re ready and when the Firm needs
them, rather than using the traditional approach of
requiring them to complete a specified number of years of
service in each rank.

Monitoring Appendix
US audit overall staff through senior manager retention top-rated seniors and staff is similar to the overall retention
rate by rank rate for professionals at these ranks.
Fiscal Fiscal Fiscal
2022 2021 2020 We track how our professionals feel about their experience
Senior managers and managers 74% 72% 85% at EY by surveying them three times a year. In our
Seniors and staff 73% 69% 79% survey in November 2022, 79% of our people said “my
EY experience is exceptional,”a substantially higher
percentage than in 2021. We believe this improvement
We retained a higher percentage of our audit professionals indicates that our continuing investments in our people are
in fiscal 2022 than we did the previous year, but our total having a positive effect.
retention rate of 74% was still below our historical rate of
approximately 78%, due to the Great Resignation and the Our professionals’ average annual hours in excess of 40
strong job market. To continue to boost retention, we are hours per week by rank are generally consistent with the
investing in our culture and our people. For example, we are previous year.
providing more opportunities for our professionals to work
on more challenging assignments as we expand our focus
Average annual hours in excess of 40 hours per week
on analyzing data and expand our teams that specialize in by rank
certain auditing topics. Over the past two years, the US firm Fiscal Fiscal Fiscal
has increased compensation, bonuses, recognition awards 2022 2021 2020
and wellbeing benefits. Partners and managing directors 373 401 393
Senior managers and managers 287 290 298
Our retention rate for top-rated senior managers and Seniors and staff 203 212 226
managers is 79%, which is higher than our overall retention
rate for professionals at these ranks. Our retention rate for

Monitoring Appendix
Developing our people Ratios of audit executives to other audit professionals

We are committed to enhancing the growth and
Fiscal Fiscal Fiscal
development of our professionals. We focus on making 2022 2021 2020
sure they have the right skills to succeed and become Partners and managing directors
1 to 8.3 1 to 8.6 1 to 8.4
to staff through senior managers
transformative leaders who can continue to innovate and
drive audit quality. Senior managers and managers
1 to 2.9 1 to 2.8 1 to 2.9
to seniors and staff
Our approach to performance management supports

Our learning program is designed to make sure our audit
the growth of our professionals by providing them with
professionals receive the right training at the right time.
meaningful career conversations, along with regular
feedback about their performance.
To help our people complete their learning requirements,
we set aside half days each quarter for them to focus on
On-the-job coaching and supervision for less-experienced
training. We also have a calendar of requirements and
professionals is critical to delivering high-quality audits.
deadlines by rank to help our professionals complete
That’s why we focus on maintaining appropriate ratios
their training throughout the year. In 2022, we added
of executives to less-experienced members of our audit
a navigation feature to make it easier for them to find
teams. We note that our ratios have remained consistent
courses in which they are interested.
over the last two years despite higher than normal attrition
rates. Our partners and managing directors who coach,
mentor and supervise more junior professionals have on
average 21.0 and 18.5 years of service, respectively.

Monitoring Appendix
Our professionals can also earn EY master’s degrees online Average hours of continuing professional education by
from Hult International Business School, free of charge, in fiscal year
Business Analytics, Sustainability or Tech. 2022 2021 2020
85 97 96
In 2022, our audit professionals completed approximately
115,000 hours of training on digital auditing, much Attracting exceptional talent
of it embedded in our core audit training. This training We focus on attracting a talented and diverse group of
followed the 190,000 hours of training on digital people who share our values and our commitment to
auditing our professionals completed in 2021, when executing high-quality audits. In our campus recruiting,
we fully implemented our digital audit methodology on we stress the importance of the work we do as auditors in
public company audits. Our junior audit team members serving the public interest, the value that DEI brings, the
were required to complete a fraud training that focused opportunities to develop digital skills and grow as a leader,
on asking better questions, while audit partners and as well as the value of EY’s reputation as a great place to
senior managers were required to complete a training build a career.
on professional skepticism. We also required our more
experienced team members to complete training on In fiscal year 2022, we hired more than 2,200 people from
cybersecurity and ESG topics. college and university campuses. We continue to actively
hire people who have both an accounting degree and a
As they have in the past, our audit professionals substantially major or minor in data analytics, management information
exceeded our requirement to complete 40 hours of systems or computer information systems.
continuing professional education in any given year.
Our professionals are rewarded financially for passing the CPA exam early
in their careers. We also reward professionals who are recognized by the
American Institute of Certified Public Accountants (AICPA) with Elijah Watt
Sells Awards for achieving exceptional results on the CPA exam. We are
proud to report that eight EY US professionals were among the 57 people
who received this honor in 2022.

Monitoring Appendix
Intern to partner
Jamelia Livingston, a newly promoted audit partner, got her first taste of life
at EY as a sophomore in college. She joined the inaugural class of 50 Launch The Launch internship
interns who rotated through each of EY’s service lines, building relationships,
creates an environment
soaking up the Firm’s culture and gaining the confidence to pursue a career
in a field they felt passionate about. For Jamelia, that was our audit practice, where you gain enriching
where she did a summer internship the following year. She credits her experiences that propel
internships with preparing her to quickly become a high performer when she your career forward.
joined the EY audit practice full time in 2009. Since then, she has audited
large multinational companies and worked with colleagues around the world.
Jamelia Livingston
Throughout her career, Jamelia has also focused on diversity, equity and
Audit partner
inclusion and helping the Firm expand the Launch program. In June, Jamelia
addressed this year’s class of more than 500 Launch interns and encouraged
them to be authentic as they pursue their careers.
We also have internship programs that prepare college For list for 24 consecutive years. EY US also continues to
students for a career in accounting. Students just be among the top 20 employers for business graduates in
beginning their college careers can gain exposure to Universum’s annual Most Attractive Employers ranking.
EY through our Expedition internship, in which they
participate in workshops and activities. Students who are
EY US is widely recognized as a great place to
two years or more away from graduation can become
work, as demonstrated by the following:
Launch interns, who are exposed to our Assurance practice
and other service lines. We also have winter and summer • Fortune magazine’s 100 Best Companies to Work
audit internships. In 2022, about 700 winter interns and For list for the 24th consecutive year
more than 1,400 summer interns gained experience • DiversityInc’s Top 50 Hall of Fame recognition
working in our audit practice. for the fourth consecutive year for companies
that have achieved a No. 1 ranking on its Top 50
Our reputation as a great place to work and our culture Companies for Diversity list
of belonging enhance our ability to attract exceptional
people. For example, we are the only Big Four firm to have
made Fortune magazine’s 100 Best Companies to Work

Monitoring Appendix
Supporting our teams

We support our teams by providing coaching,
interpretive guidance and enablement, and
our technical support groups consult with
them on difficult accounting, auditing, and
SEC and other regulatory matters.
Our Quality Network In fiscal 2022, our Quality Network coaches focused on our
Our Quality Network focuses on proactively improving audit teams’ use of data in our audits, audits of internal control
quality by coaching our audit teams, performing workpaper over financial reporting for companies that were subject
reviews, advising our teams on audit methodology matters, to this requirement for the first time, material business
providing training, and executing various risk management combinations and risks related to increased turnover on
and quality control procedures. our audit teams. Nearly 600 public company audit teams
received coaching or workpaper reviews in fiscal 2022.
Throughout the audit cycle, the Quality Network uses data
analytical techniques to evaluate a wide range of information
about individual engagements and identify teams for
coaching or other help. The information is updated frequently. In fiscal 2023, we are continuing to invest in
supporting our teams through coaching, workpaper
The roughly 120 professionals who make up our national reviews, learning and other quality control activities.
Quality Network are embedded in our Regions. They have This is especially important in the current environment as our
frequent contact with teams and identify and audit teams evaluate macroeconomic and other risk factors.
proactively address emerging risks, including industry-
Linda Lam
specific risks. They’re also able to share that knowledge
US Assurance Director of Quality Implementation
across the practice.

Monitoring Appendix
Our independent and objective consultation process drives audit quality by helping our
teams work through new and complex accounting, auditing and reporting issues and
making sure we comply with all relevant standards, rules and regulations.
James R. Estes
US Vice Chair — Professional Practice
In the current audit cycle, our Quality Network coaches are our monitoring and internal inspections programs, which
focusing on our IT audit approach, given the increasingly are described in the next section of this report.
complex IT environment, and other audits we identified in
our risk assessment process. They are also focusing on our Over the last three years, our Professional Practice partners
first-year audits of internal control over financial reporting have conducted an average of 2,200 formal consultations
and our work on material business combinations. annually with audit teams on audit and accounting topics.
Our Professional Practice group Other support

Our Professional Practice group, which includes Our Innovation Network, the centralized data service delivery
approximately 100 partners and 30 managing directors, model for EY US, continues to provide our teams with
supports our audit practice by consulting with our teams access to approximately 600 data analytics professionals
on difficult accounting, auditing, and SEC and other who can help them efficiently capture data from the
regulatory matters. Partners and managing directors who companies we audit and use it effectively in the audit.
consult with audit teams are independent of those teams.
As discussed earlier, professionals in our US Independence
Our Professional Practice group provides audit teams and the group also support our US audit teams by consulting with
companies we audit with guidance and thought leadership on them on various independence matters.
a wide range of financial reporting topics, including current
issues such as reporting on ESG matters. The group also Offshore professionals who support the EY global network
develops guidance and enablement to help our teams deliver also work with our teams to make sure they are using all of
high-quality audits, performs risk management activities, the project management functions in EY Canvas effectively.
evaluates and tests our quality control system, and operates
Our ratio of Quality Network and Professional Practice partners and

managing directors to audit partners and managing directors was 1 to 6.

Monitoring Appendix
Monitoring
Monitoring the effectiveness of our actions
and performing robust root cause analyses
of positive and negative audit performance
are key components of our system of
quality control. The results provide
valuable information about how we can
continuously improve audit quality.
Early assessment of in-progress audits In these inspections, we focus on specific areas of an audit
Our reviews of certain public company audits before we and evaluate our compliance with professional standards,
issue our auditor’s reports are an important component regulatory requirements and our policies. Audits are
of our system of quality control. We conduct these pre- selected for review based on several factors, including how
issuance reviews to provide timely feedback to teams and long it has been since a partner’s last inspection and the
to help us determine whether the actions we are taking results of that inspection.
to improve audit quality are achieving our objectives or
whether enhancements to our training, guidance or tools In 2022, we inspected approximately 200 public and
are required during the current audit cycle. private company audits (generally of financial
statements for the year ended 31 December 2021).
Internal inspections of completed audits We learn from both public and private company internal
We conduct internal inspections of selected engagements inspection results.
after we issue our auditor’s report. We perform many of
these inspections in the first half of the calendar year to
obtain information that we can use to continue to enhance
the quality of upcoming audits.

Monitoring Appendix
Turning root cause analyses into actions Restatements

We analyze the root cause of internal and external We monitor restatements of the financial statements of
inspection findings and positive and negative quality events the companies we audit and evaluate whether there are
by interviewing teams and analyzing data about our audit any trends that require additional action or changes to our
practice. We use the results to design the actions we take to system of quality control.
improve audit quality. We also use this information to obtain
meaningful insights into the effectiveness of actions the In 2021, 18 of the companies we audit (1.7%) disclosed
Firm has taken to improve our system of quality control. restatements and reissued their financial statements,
including 17 related to accounting for warrants issued by
This comprehensive process helps us confirm that we are special purpose acquisition companies (SPACs). In 2020,
taking the right actions to drive greater consistency in our three of the companies we audit (0.3%) reissued their
audit execution. financial statements, and in 2019, only one (0.1%) did. The
percentages are based on the approximately 1,650 issuers
We also analyze the root cause of positive quality events, we audit, which includes about 550 mutual fund issuers
which we define as (1) exceptional performance in an audit in each of the past three years in addition to the SEC
area that was inspected, (2) best-in-class interactions with registrants we audit.
our Professional Practice group or the Quality Network,
or (3) a clear demonstration of the behaviors we believe Our 2021 increase in restatements reflected an industry-
contribute to quality, especially in a difficult situation. wide trend: Research firm Audit Analytics said the total
number of restatements nearly doubled in 2021, and more
Other monitoring than 77% of them related to SPAC-centered issues (i.e.,
We continue to monitor our professionals’ compliance with accounting for warrants and redeemable shares) after
our independence policies and enhance our monitoring the SEC staff issued statements about the appropriate
of the effectiveness of our system of quality control, as accounting for these instruments.
discussed earlier in this report.

Monitoring Appendix
External inspections
PCAOB inspections have led to improvements
in audit quality, and we expect the PCAOB to
focus on further improvements.
The role of the PCAOB portion of the report to draw conclusions about a firm’s
The PCAOB, which was created 20 years ago, plays an entire practice and says the results aren’t necessarily
important role in maintaining and improving audit quality. comparable over time or from firm to firm.
Through annual inspections and standard setting, the PCAOB
identifies areas where firms can enhance audit quality. We learn from every deficiency identified in inspections.
Some deficiencies require us to perform more work on a
Part I.A of the PCAOB inspection report particular audit. To address others, we make changes to
This section of a PCAOB report, which is released to our processes or reconsider elements of our system of
the public, describes the procedures the PCAOB staff quality control.
performed during the inspection and certain observations
regarding audit deficiencies on these engagements.
The PCAOB focuses its inspections primarily on higher-

risk audits, and the inspections are designed to identify
deficiencies in audit work. As a result, the Board cautions
against using the number of audits with deficiencies in this

Monitoring Appendix
The graphics and discussion below reflect results of our PCAOB inspections through the 2021 inspection cycle, which
generally covers our audits of 2020 financial statements and is the latest report the PCAOB has released.
2021 2020 2019
12 8 11
21% 15% 18%
44 44 49
Audits without Part I.A deficiencies Audits with Part I.A deficiencies
2 2
1
2021 9 4 2020 4 2019 5
Deficiencies in both financial Deficiencies in the financial Deficiencies in the ICFR

statement and ICFR audits statement audit only audit only
As shown above, overall inspection findings increased in the 2021 inspection cycle. The number of audits with deficiencies
in both the financial statement audit and the audit of internal control over financial reporting (ICFR) also increased.
We have addressed these 2021 inspection findings and those we expect to be identified in our 2022 inspection report with
the actions described throughout this report. We are enhancing certain aspects of our approach to auditing IT controls,
strengthening supervision by executives, simplifying and standardizing aspects of our audit approach, and creating
centralized teams to provide audit support on various topics.

Monitoring Appendix
The PCAOB has said it identified a collective increase in Part II of the PCAOB report and status of
the number of deficiencies in its 2021 inspections of audit inspection reports
firms, and the preliminary results of its 2022 inspections Part II observations about a firm’s system of quality control
indicate even more deficiencies. are only released publicly if the PCAOB determines that a
firm has not addressed the deficiencies to its satisfaction
Part I.B of the PCAOB inspection report within 12 months of the report date.
Part I.B of the PCAOB’s inspection report discusses
noncompliance with PCAOB rules or standards that do In October 2022, the PCAOB updated our 2018 inspection
not relate directly to the sufficiency or appropriateness report on its website to include one Part II criticism after
of evidence the firm obtained to support its auditor’s determining that the Firm had unsatisfactorily addressed
opinion(s). In our latest report, we had these findings its criticism about compliance with the Firm’s independence
related to audit committee communications about policies for reporting personal financial relationships. We
participants in the audit, the population of matters we understand and accept the criticism and are taking actions,
considered as potential critical audit matters and inaccurate including proactively reaching out to our professionals
information we reported to the PCAOB on Form AP, among and working with them to update their reporting. While
other topics. We have taken steps to address these matters. the remedial measures we have taken have contributed to
improvements in compliance, we agree with the PCAOB
that we have more work to do.
We learn from every PCAOB finding and make changes to our approach when
necessary. We are confident that the actions we have already taken and those we
are taking now will enhance audit quality.
Denise M. Pelli
US Director of Professional Practice Quality and Regulatory Matters

Monitoring Appendix
The PCAOB’s assessment of a firm’s system of quality control In its 2019 report on our last peer review, Grant
is derived from both the results of its review of the firm’s Thornton concluded that our system of quality control
quality control policies and inferences that can be drawn from for engagements not subject to PCAOB permanent
deficiencies in the performance of individual audits. Certain inspection was suitably designed and complied with to
firm practices, policies and processes related to audit provide the Firm with reasonable assurance of performing
quality are reviewed, including those in the following areas: and reporting in conformity with applicable professional
standards in all material respects.
• Management structure and processes, including tone at
the top
International regulators
• Practices for partner management, including The International Forum of Independent Audit Regulators
allocation of partner resources and partner evaluation, (IFIAR) has issued a challenge to the global audit networks
compensation, admission and disciplinary actions to further reduce the number of audits with at least one
• Policies and procedures for considering and addressing significant finding as reported by 25 countries (including
the risks involved in accepting and retaining the the US) that are members of IFIAR by at least 25% over the
companies a firm audits, including the application of the four years ending with IFIAR’s 2023 survey of inspection
firm’s risk-rating system results. When IFIAR published its survey of 2021 inspection
results, which is the most recent survey, the EY network
• Processes related to a firm’s use of audit work performed
was on track to meet that reduction.
by its foreign affiliates on the foreign operations of
US issuers
IFIAR had previously challenged the global audit networks
• A firm’s processes for monitoring audit performance, to achieve a 25% reduction in inspection findings by 2019
including processes for identifying and assessing for listed public interest entities. The EY network achieved
indicators of deficiencies, independence policies and this goal in 2019.
procedures, and processes for responding to defects or
potential defects in quality control
The PCAOB’s 2020 report is dated September 2021, and

we submitted our final remediation response in September
2022. The PCAOB is reviewing our final responses to its
2019 and 2020 inspection reports.
Peer review
We participate in the AICPA peer review program that
requires a robust review every three years of a firm’s
system of quality control for its private company audit
practice. Grant Thornton is performing our review this
year (primarily of audits for the year ended 31 December
2021), and that review is underway.

Monitoring Appendix
EY US Executive Committee
Julie A. Boland Steve M. Payne John L. King Rajesh Sharma

US Chair and Managing Partner US Deputy Chair US Vice Chair, US Vice Chair,
Assurance Consulting
Mitchell R. Berlin Kevin D. Flynn Sam R. Johnson Leslie D.J. Patterson

US Vice Chair, US Vice Chair, US Vice Chair, US Diversity,
Strategy and Transaction Services Tax Accounts Equity and Inclusiveness Leader
James Hsu Ginnie L. Carlier Jay Persaud Angela L. Christie

US Vice Chair, US Vice Chair, US Vice Chair, US Regional Vice Chair,
Office of Strategic Execution Talent Risk Management US-Central
Marcelo B. Bartholo Janet E. Truncale Francis C. Mahoney

US Regional Vice Chair, US Regional Vice Chair, US Regional Vice Chair,
US-East Financial Services Organization US-West

EY | Building a better working world
EY exists to build a better working world, helping to create

long-term value for clients, people and society and build
trust in the capital markets.
Enabled by data and technology, diverse EY teams in over

150 countries provide trust through assurance and help
clients grow, transform and operate.
Working across assurance, consulting, law, strategy, tax

and transactions, EY teams ask better questions to find
new answers for the complex issues facing our world today.
EY refers to the global organization, and may refer to one or more,

of the member firms of Ernst & Young Global Limited, each of
which is a separate legal entity. Ernst & Young Global Limited, a UK
company limited by guarantee, does not provide services to clients.
Information about how EY collects and uses personal data and a
description of the rights individuals have under data protection
legislation are available via ey.com/privacy. EY member firms do not
practice law where prohibited by local laws. For more information
about our organization, please visit ey.com.
Ernst & Young LLP is a client-serving member firm of Ernst & Young
Global Limited operating in the US.
© 2023 Ernst & Young LLP.

All Rights Reserved.
US SCORE no. 18364-231US
2203-3997007
ED None
This material has been prepared for general informational purposes only and is not intended
to be relied upon as accounting, tax, legal or other professional advice. Please refer to your
advisors for specific advice.
ey.com

Ey 2022 Audit Quality Report

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ey 2022 Audit Quality Report

Uploaded by

Copyright:

Available Formats

Our commitment

Audit committees, investors and other stakeholders

Julie A. Boland John L. King

2 | Our commitment to audit quality

Reinforcing the cornerstones of

3 | Our commitment to audit quality

A snapshot of key metrics

US audit professionals by rank who are racially and

Seniors and staff

Innovating and executing high-quality audits

Ratio of Quality Network and

10.7% 4.7% 1.4% 1.0%

4 | Our commitment to audit quality

How we define audit quality We also understand the importance of providing

Our global organization The EY global organization’s Sustainable Audit Quality

Our system of quality control Independence and objectivity

We continuously review and enhance our quality control processes

In 2022, we enhanced our Global Monitoring System to

All EY US professionals and certain others are also required

Our policies require that audit teams communicate

Independent advice on audit quality

IAQC member Jeanette M. Franzel is IAQC member Dina Dublon is a former

Julie A. Boland — US Chair and Managing Partner

Engagement with stakeholders

Future of the profession

13 | Our commitment to audit quality

EY Helix analyzers for use on all financial statement audits

14 | Our commitment to audit quality

We believe a data-driven audit is a higher-quality audit. It allows us

We use the latest data analytic technology in

15 | Our commitment to audit quality

EY Canvas audit platform confirmation process, including sending digital requests,

16 | Our commitment to audit quality

17 | Our commitment to audit quality

The right skills Percentage of US public company audit hours

18 | Our commitment to audit quality

19 | Our commitment to audit quality

EY digital audit technology

EY Canvas EY Canvas EY Smart

20 | Our commitment to audit quality

Putting our people first importance of having a continuous improvement mindset.

21 | Our commitment to audit quality

Highlights of our benefits

Time off Emotional wellbeing

Physical wellbeing Daily-life resources

22 | Our commitment to audit quality

23 | Our commitment to audit quality

DEI in our leadership

24 | Our commitment to audit quality

We are actively pursuing the Management Leadership for

We are committed to building a robust pipeline of exceptional leaders who

25 | Our commitment to audit quality

26 | Our commitment to audit quality

27 | Our commitment to audit quality

Developing our people Ratios of audit executives to other audit professionals

Our approach to performance management supports

28 | Our commitment to audit quality

29 | Our commitment to audit quality

30 | Our commitment to audit quality

Supporting our teams

31 | Our commitment to audit quality

Our Professional Practice group Other support