Our role in the capital markets

Audit plays a fundamentally important role in business transparency and helps restore growth to the wider UK economy.

We are committed to helping clients meet regulatory standards to better fulfil the needs of investors and have taken steps to introduce innovative techniques to raise the benchmark. This is underpinned by the Distinctive Audit, launched in FY14, which will, we believe, encompass the next generation of auditing. Our approach means each audit is bespoke and forward-looking, which should ultimately deliver superior insight in terms of risk.

Our use of cutting-edge analytics technologies will improve audit quality and professional scepticism – both of which are crucial to rebuild trust following the financial crisis. For example, masses of company data can be analysed in real-time with more efficiency. This means anomalies or new trends can be identified and interrogated more readily and companies will be more agile in responding to market pressures.

Case study

Fraud in the Spotlight

Spotlight is a bespoke analytics tool that allows audit teams to look for unusual trends and anomalies within large data sets.

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In FY14, we launched a new framework to assist audit committees in meeting new annual requirements, including a comprehensive series of best practice statements. It goes beyond existing published checklists, embraces all the latest reporting requirements and will provide audit committees with a comprehensive tool with which to fulfil the latest requirements. We believe our initiatives will improve financial information, making it more timely and relevant to the capital markets.

Case study

Extended audit reporting

Deloitte was the first firm to publish an extended audit report in May 2013, for Vodafone. In FY14, we have sought to build on this momentum and have issued 73 enhanced audit reports for the FTSE350.

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In the past year we have been engaging proactively in consultations with the UK Competition and Markets Authority, European authorities and the Financial Reporting Council (FRC) about audit. The revised UK Corporate Governance Code and Guidance on Audit Committees, together with the work of these regulatory bodies, have brought about an evolution in the audit market. More frequent and consistent tendering will become the norm, bringing more opportunities for a broader range of firms to compete in the market.

In addition to our contributions to the various regulatory consultations, we provided evidence to the Parliamentary Commission on Banking Standards. We suggested solutions to improve communication between auditors and financial supervisors, enhance the transparency of banks’ risks, and methods for improved auditor reporting models.

Our work this year across audit reflects our unyielding focus on innovation, excellent governance and transparency as we seek to drive higher standards across the market.

Stakeholder engagement

Given our important public interest role we put great emphasis on how we engage with investors and during the year we held our second Stakeholder Forum.

This event for investors, business and professional bodies, government and regulators is a vital opportunity for members of Deloitte’s executive, board and independent non-executive directors to listen and respond to the issues that matter most to our stakeholders. A third event is being planned for 31 October 2014. We have also held a series of investor dinners during the year to facilitate feedback.