From our leaders
Change is constant. Economic volatility, technological disruption, climate and geopolitical concerns have become the norm. Most recently, we’ve seen and felt the impacts of the election of a new U.S. president, including pending changes to leadership at the SEC that will bring changes in priorities and views that will influence future actions of standard setters and regulators. Although we are all becoming more accustomed to these constant shifts, we still face new complexities and growing uncertainty.
As leaders, we need to find the opportunities to explore through reinvention and find new possibilities to create and deliver value, while remaining grounded in the fundamentals of our business. At PwC, delivering quality and acting with integrity are expected of us and what we expect of ourselves, especially in times of change. This commitment to quality and integrity is foundational to our purpose and values and embedded in our culture, strategy, and organization. It is — and always will be — our number one priority.
Transparency regarding matters relating to audit quality is important to meeting those expectations, which is why we are pleased to provide below a brief update to our 2024 Audit Quality Report. The actions described below are important to maintaining momentum in the pursuit of quality — helping us stay on the leading edge by making connections, evaluating implications, solving complex problems, and delivering insights that spark new ways of thinking.
We are proud to consistently serve as a leader on quality within the profession. Thank you for continuing to engage with us as we strive to meet our quality objectives.
Maintaining momentum in our pursuit of quality
A March 2025 update to our 2024 Audit Quality Report
Our people
- We are focused on helping to create new opportunities for entry and offering greater access to the profession for aspiring talent, including through Destination CPA.
- We have increased our attention to existing and potential new activities to raise awareness of careers in accounting and auditing, including additional outreach at colleges and universities and new resources to increase student interest in accounting, such as our Accountants have impACCT video series.
- We remain focused on providing our skilled audit professionals opportunities for growth and competitive rewards and benefits. We’ve increased entry-level salaries and continue to support performance-based raises and bonuses at all levels.
Our ways of working
- In FY25, we are emphasizing more in-person time together to reignite personal connections, enhance collaboration, and accelerate learning and development. This includes additional mandatory classroom training and organized in-person opportunities for our audit professionals.
- Our apprenticeship culture, which benefits from these in-person activities, fosters continuous learning and teaching, providing our people with opportunities for growth, regardless of where or how they work. We’ve provided our people with numerous resources to establish strong team dynamics and prioritize on-the-job learning and teaching. We’ve also enhanced training for new managers and senior associates, which reinforces the impact of apprenticeship and behaviors that enhance overall audit quality.
- We’ve invested in comprehensive programs to enable our team members, including those at Acceleration Centers, to collaborate more seamlessly and effectively, while providing more consistent well-being and developmental experiences.
Our technology
- Our existing methodology and technology, integrated through Aura, support a quality, insightful, and efficient audit today. Nonetheless, the growing use of advanced technology, including AI, is changing and accelerating how our teams perform everyday audit tasks. In FY25, our teams expanded the use of GenAI technologies (including ChatPwC, Microsoft Copilot, and ChatNational) in performing audit procedures. We provided our audit teams with updated policies, guidance, training, and other resources addressing, for example, considerations related to appropriate direction, supervision, and review of work performed using GenAI and communications regarding the use of GenAI.
- Our global Next Generation Audit (NGA) program leverages an AI-first technology strategy to equip our auditors with the latest technologies and digital capabilities to meet fast changing needs. As we integrate advanced technologies into our audit procedures, we're not just innovating; we're revolutionizing the audit process to enhance quality and drive exceptional experiences.
Our system of quality management
- We are a learning organization, including as it relates to our system of quality management. We identify opportunities for enhancement through a range of monitoring activities, including inspections.
- As with prior years, the results from both internal and external inspections are largely positive, consistent with our culture of quality, commitment to continuous improvement, and the dedication of our people.
- Our 2024 internal inspections program (generally covering 2023 audits) is complete. 199 audit engagements were subject to internal inspection with a 97% rate of compliance.
- The PCAOB’s most recent 2024 inspection cycle (generally covering 2023 audits) is also complete, and our 2024 inspection report was recently published. In the report, ten of the 64 audits inspected were included in Part I.A.
- The firm recently received a peer review rating of pass for the year ended June 30, 2024.
- We continue to invest in our system of quality management, leveraging technology and data to monitor audit quality and making enhancements when necessary to comply with changes in the auditing environment and regulatory landscape.
- We have enhanced our guidance, methodology and training regarding direction, supervision, and review in certain audit areas, as well as our guidance and tools to facilitate communication with audit committees. We’ve also updated aspects of our independence policies, guidance, and training related to obtaining preapproval of certain services.
- We are on track to implement the PCAOB’s new quality control standard, QC 1000, on or before the effective date of December 15, 2025. We have made significant progress in key areas, such as defining the composition, role, and responsibilities of our External Quality Control Function.
Read more in our 2024 Audit Quality Report
Our 2024 Audit Quality Report provides transparency, through the unique perspective of our leadership, into the health of our audit practice, actions we have taken to satisfy our quality objectives, and how the quality of our audits have measured up to expectations - including insights into over 20 quantitative transparency data points related to our culture, people, audit approach and technology, and quality monitoring.
Highlights from our 2024 Audit Quality Report
Our culture and values
- Our leaders prioritize the delivery of quality service. Quality, ethical behavior and accountability are regularly reinforced in communications. Our accountability framework specifies expected actions and behaviors, and includes consequences when exceptions occur.
- The most senior members of our Operating Committee, including the Senior Partner, Chief Operating Officer, Chief Commercial Officer, Chief Financial Officer, General Counsel, Assurance Leader, Tax Leader, and Advisory Leader signed income-at-risk provisions that are are expected to apply in circumstances such as pervasive and significant firm-level incidents, for example, significant breakdowns in the system of quality management.
- Our independence compliance programs consider independence in both fact and appearance and include systems and processes that support our people in maintaining independence. We've issued guidance to assist teams in mitigating the risk of violations in certain areas of our independence policy that we identified as more likely to involve complex, unusual, or unfamiliar circumstances, for example, voluntary and involuntary situations that could lead to a restricted client becoming unrestricted, and certain joint business relationships.
- If an independence exception occurs, we determine whether the firm remains objective and impartial and timely communicate the matter to our client.
- We accept or continue audit relationships only when supported by our assessment of business, litigation, and reputational risks and audit procedures can be satisfactorily designed and executed.
Our people experience
- Attracting, retaining, and developing top talent is fundamental to our ability to deliver quality. We’re committed to taking action that benefits our profession and builds the future talent pipeline and to maintain a meaningful people experience that supports development for our people and the skills to serve their professional goals.
- We continue to embrace more in-person time together to further support the development and needs of our people and enhance team collaboration.
- Our rewards strategy recognizes the growth and impact of the individual, including their contributions to delivering quality and value. We remain committed to proactively increasing base pay for our audit professionals when needed to align with our ongoing evaluation of market conditions.
- Partners are evaluated based on their contributions, inclusive of impact and quality. Our audit partners are not evaluated or compensated for selling non-audit services to their audit clients. The performance of other audit team members is assessed against dimensions guiding critical skills and behaviors related to delivering audit quality.
- Completion of required auditing; accounting; and annual independence, ethics, and compliance training is a component of individual performance.
Our audit approach
- Our audit teams are composed of individuals who bring the right blend of technical capabilities and industry knowledge.
- In FY24, we provided enhanced guidance, including helpful tools, working practices and examples, to facilitate the direction, supervision, and review of engagement team members and took additional, focused action to reinforce the professional skills of our new reviewers.
- Our fully integrated Acceleration Center (AC) audit team members perform an increasing amount of work in specific audit areas, allowing teams to appropriately scale and standardize work to enhance quality.
- Our audit teams utilize our broad network of multidisciplinary specialists to better understand the business, identify and address relevant risks, stay informed on developing matters, and obtain insights.
- Our National Office, Chief Auditor Network, and Quality Management Network also support our audit teams, so they do not have to go it alone. In FY24, our National Office addressed various auditing, accounting, reporting, and other practice matters – including, for example, Pillar Two, new auditing standards and rules for multilocation audits, new SEC cybersecurity disclosure rules, the Middle East conflict – through enhanced guidance and tools, additional training, and targeted reach-outs.
- Aura, our cloud-based audit platform, is used globally across all of our audits. Our audit tools and technology are designed to support leading audit practices based on the data and process maturity of our clients, and we continue to add innovative capabilities to drive quality and improve the audit experience. Our audit teams can access specialized tools to visualize and analyze, for example, full revenue populations at the transaction level.
- In FY24, we introduced multiple tools that leverage GenAI, including ChatNational, ChatPwC, and Microsoft’s M365 Copilot. We created comprehensive GenAI training and business rules regarding the appropriate use of GenAI in performing certain tasks. Collectively, our audit and Digital Assurance & Technology professionals have had approximately 37,000 hours of training on the use of AI.
Our approach to quality management
- Each member firm in the PwC Network is responsible for monitoring and continuously improving its system of quality management. PwC US partners receive information about the results of the Network inspection program to consider in planning and performing their audit work. We also assist member firms in promoting quality in audits performed under US auditing standards, for example by providing training materials and access to experienced resources.
- Our system of quality management is designed to meet the requirements of the PwC Network’s Quality Management and Service Excellence (QMSE) framework and the relevant quality control standards of the PCAOB, AICPA and IAASB, including International Standard on Quality Management 1 (ISQM1). The most recent annual evaluation confirmed that as of March 31, 2024, our system of quality management over our audit practice is designed appropriately and operating effectively to provide reasonable assurance that the quality objectives prescribed by the relevant quality control standards, including ISQM 1, and the PwC Network’s QMSE framework have been achieved.
- We monitor the quality of our US audits through various channels, including internal and external inspections.
- As a learning organization, we continue to focus on identifying and responding to opportunities for enhancement in a timely manner.
A snapshot of our FY24 transparency data points
97% of our audit professionals reported that they receive consistent messages about the importance of audit quality from leadership
Total average annual voluntary turnover decreased to 12.7%. Average annual overtime for our associates through directors also decreased.
We hired over 1,800 entry-level and over 50 experienced audit professionals, respectively, Total headcount increased to over 16,000 audit team members.
Less than 1% of the issuer annual financial statements audited by PwC in the past five years have been restated.
Average training hours per audit professional increased to 90.
199 audits were subject to internal inspection with a compliance rate of 97%
The ratio of partners/managing directors (MDs) in technical support roles to total partners/MDs increased to 1 to 5.7.
The ratio of partners/managing directors to all other audit team members (including ACs) decreased to 1 to 13.7.
10 audits (out of 64 audit inspections) were included in Part I.A of our 2024 PCAOB Inspection report (generally covering 2023 year-ends).
More than 100,000 auditors across the PwC Network use Aura.
The percentage of audit hours provided by specialists decreased slightly to 16.9%.
Our 300+ independence specialists conducted over 38,000 independence related consultations.
What is audit quality
- Audit quality means that we consistently
- Our audit quality principles are achieved through our audit quality practices
Audit quality means that we consistently
- comply with professional standards;
- exercise professional skepticism;
- use our experience to identify and resolve issues timely; and
- apply a deep and broad understanding of our clients’ businesses and the financial environment in which they operate in identifying and responding to risks relevant to our audit.
Our audit quality principles are achieved through our audit quality practices
Our audit quality principles are achieved through our audit quality practices and mean that we:
- ask tough questions;
- apply an objective and skeptical mindset;
- embrace the supervision and review process as a way to continuously improve;
- stay current on professional standards;
- have timely, meaningful exchanges with audit committees and management;
- plan our work and resolve issues in a timely and thorough fashion;
- remain alert for issues that need deeper analysis;
- act with professionalism; and
- take actions that recognize our role in the capital markets to contribute to confidence in the information provided by companies.
We have the right leadership, people and technical capabilities to achieve remarkable things. And we will be relentless in our pursuit of providing quality work across the firm.
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