Audit quality in the 21st century was the topic of the final accountancy lyceum of the fall 2005 semester. A graduate of Harding University with a BBA in accounting, Bruce Piller joined KPMG LLP in 1980 and is currently partner-in-charge of the Audit Chicago Metro Business unit.
During the presentation, Piller outlined the case for improving audit quality. With the recent high profile audit failures, and the requirement for increased precision, he believes in a renewed emphasis on audit quality. "Society is demanding that we do a better job," said Piller. "People's livelihoods depend on it."
He made three recommendations for change in the current audit environment: expanding monitoring and accountability, elevating the minimum standards in audit practices, and putting an emphasis on reasonable assurance. To the undergraduate students in the audience, he emphasized the importance of professional skepticism and a questioning mind. "Until you understand what they're doing, you have to keep on asking why."
Next, he gave an overview of the determinants of audit quality and focused on the structure, process, and outcomes of the audit process. Structure concerns human resources and organizational characteristics, while process involves setting objectives and making risk assessments. Mr. Piller also discussed the role of validations in audit quality, noting that the number of restatements had gone up recently. He concluded that attaining a high level of audit quality was a shared responsibility, and that every member of the management team should be aware of what can go wrong.
The nature of 21st century audit quality was the final topic Piller discussed. He emphasized risk assessment and understanding the entity being audited, as well as the importance of understanding the industry in which the entity operates. Piller believes that a good auditor has to be thinking constantly about what can go wrong. "We have to ask ourselves whether we are biased or not," said Piller. "The best auditors are the ones who think deeply about what they are doing, not the ones going through a checklist."
At the end of his presentation, Piller emphasized the role of the individual in audit quality. "Auditing is not about going through a bunch of procedures," stated Piller. "It is a professional judgment and decision-making journey."
During his conclusion, he praised the campus for doing one of the best jobs in the country in terms of teaching. "UIUC is on the forefront of accountancy education, and it should continue to teach the students to think differently."