External monitoring

Independent oversight and external quality assurance review A number of the firm’s activities, including audit, recovery and reorganisation, financial planning work and some aspects of our corporate finance work are regulated by independent bodies.

The firm’s audit practice is regulated by the Institute of Chartered Accountants in England and Wales (ICAEW); public interest audit work is examined (currently annually) by the Audit Inspection Unit (AIU) of the Professional Oversight Board, a part of the Financial Reporting Council (FRC); other audits are subject to review by the Quality Assurance Directorate (QAD) of the ICAEW.

The fieldwork for our most recent completed review by the AIU took place between June and December 2008 and the findings were reported privately to the firm in July 2009; the public report has yet to be published; the fieldwork for the latest completed review by the QAD took place in July 2009.

Each visit by the AIU considers the suitability of the firm’s audit methodology and of the firm’s policies and procedures that are designed to deliver the elements of ISQC 1 (UK and Ireland). It also reviews a number of public interest audit assignment files. The QAD reviews a number of files that fall outside the scope of the AIU reviews, covering the firm’s offices on a cyclical basis.

In our Recovery and Reorganisation team, each of the 49 partners and directors who accept insolvency related appointments is licensed by one of the recognised professional bodies (RPBs), which include the ICAEW, ICAS, BIS and IPA.

As such, these partners and directors are subject to regular monitoring reviews by their RPB. All current appointment takers hold insolvency practitioner licences issued without conditions or restrictions.

Some of the firm’s client services – principally financial planning and certain corporate finance lead advisory work – are regulated by the Financial ervices Authority (FSA). The FSA carries out regular assessments of any risks that the firm’s relevant activities might pose to their statutory objectives as laid down in the Financial Services and Markets Act 2000. Its most recent visit was conducted in September 2009.

The firm has registered with the Public Company Accounting Oversight Board (PCAOB) and underwent an inspection in summer 2008. The firm is also registered with the Canadian Public Accountability Board (CPAB) and with the Netherlands Authority for Financial Markets (AFM) in order to be able to audit certain clients with securities traded in Canada and the Netherlands.

In addition, the firm is subject to practice reviews by the ICAEW Quality Assurance Directorate of those activities not otherwise regulated. Our external audit is undertaken by PKF UK LLP.

Serious consideration is given by senior management and, where appropriate, the Partnership Committee, to any recommendations made as a result of internal reviews or by a regulator and action taken to implement appropriate changes.