Transparency statement 2012
Clement Keys – Transparency Report 2012
Clement Keys is pleased to present its fourth Transparency Report for the financial year ending 30 September 2012. This statement is prepared in compliance with The Statutory Auditors (Transparency) Instrument 2008 and is designed to give background information on the firm and the practices adopted to ensure the maintenance of high quality standards in our audit services.
Legal structure and ownership of the firm
Clement Keys was a partnership with unlimited liability governed by the terms of its partnership deed. It is owned by its equity partners and as at 30 September 2012 there were seven equity partners. In addition to the seven equity partners there were also three salaried partners who do not have a financial stake in the firm.
Clement Keys operates from an office in Birmingham in the UK, has no other related firms in the UK and has no branches outside of the UK. Its principal service lines are accountancy, audit, business advisory, corporate finance, and personal and corporate taxation services.
Clement Keys is not a member of a network but it is a member of PrimeGlobal, a worldwide association of independent firms offering a range of professional services including auditing and accounting, taxation and business consulting.
Governance Structure of the firm
The partners meet on a monthly basis to discuss operational issues, financial affairs and staffing matters. In addition, three half-day partners’ meetings are held each year which all partners attend and a full day offsite conference is held each year to discuss the long term strategy of the firm.
A Management Group is in place comprising the office managing partner, the finance partner and the personnel partner. This Group has responsibility for implementing the policies and strategies of the firm.
Membership of the Management Group is decided upon by all partners on an annual basis and for the year ended 30 September 2012 the members were Mr S Atkins, Mr P T Cook and Mr G C Whitehouse.
The Management Group is assisted by partners having direct responsibility for technical standards, training and ethics.
Departmental meetings between staff and their related partners take place throughout the year.
Internal quality control system
Clement Keys has established a quality control system that encompasses the six elements of quality control embedded within International Standard on Quality Control (UK and Ireland) 1 (ISQC1).
Leadership responsibilities for quality within the firm
The firm has established partners with responsibilities for the quality of work carried out.
The firm’s Technical Partner and Technical Director are responsible for ensuring the use of appropriate methodology and adherence to auditing standards. They are also responsible for the maintenance of the firm’s technical library and for the provision of technical advice and assistance.
The firm’s Audit Compliance Partner assumes overall responsibility for the audit work that is carried out and is responsible for completing an annual Practice Assurance review of the firm and for the completion of the firm’s annual return to the ICAEW.
The firm has a nominated Ethics Partner who is responsible for ensuring that ethical standards are maintained throughout the firm. The firm’s ethical standards are contained within the firm’s Audit Manual which is available in soft copy to all partners and staff. On an annual basis all partners and staff must complete a Fit and Proper Declaration confirming that they are aware of the ethical standards under which the firm must operate and giving details of potential conflicts of interest; these are reviewed by the Ethics Partner.
Acceptance and continuance of client relationships and specific engagements
The firm has developed robust procedures which deal with all ethical, statutory and practical aspects relating to client acceptance and dis-engagement.
Before accepting an appointment, and at the commencement of each annual audit assignment, the Responsible Individual considers the above and assesses whether the appointment should be accepted or whether the appointment should continue – as appropriate. In addition, before accepting appointment, we enquire of the outgoing auditor as to whether there are any professional or ethical reasons why we should not accept the appointment.
The acceptance of any new client is subject to the approval of two partners and any perceived high risk clients must be approved by the firm’s Technical Partner.
The firm has established recruitment policies and has set entry level criteria for graduates to ensure that all new trainees have the ability to succeed in both their professional exams and the workplace.
The firm has a published equal opportunities policy and strives to ensure that its workforce is diverse.
All staff are reviewed on a six monthly basis and feedback is provided to audit personnel on the completion of each assignment.
Engagement performance of audits
The firm has an Audit Manual that is available to all partners and staff in soft copy and it sets out the firm’s audit methodology and procedures. The firm uses proprietary audit software to complete the statutory audit of limited companies and has developed its own audit programmes for its specialist audits; these cover mainly charities and pension schemes and are fully compliant with International Standards on Auditing (UK and Ireland).
All public interest client audits require a second independent partner review prior to the audit report being signed. In addition, all qualified audit reports require a second independent partner review.
Monitoring of audit quality
Each year a programme of cold file reviews is undertaken under the supervision of a partner responsible for the quality control review process. On a quarterly basis, the firm engages external reviewers to carry out a sample review of the firm’s audit files ensuring that each Responsible Individual has at least one file per year reviewed. On completion of each review the findings are communicated to the relevant Responsible Individual and manager and any recommendations arising from the reviews, of general application, are communicated to the Technical Partner and to staff through a technical newsletter.
Statement on the effectiveness of the internal quality control system
The partners are confident that the procedures detailed above, including the monitoring of the control system, ensure that the firm produces audits that have been performed to a high standard and that appropriate audit reports have been issued.
Clement Keys is authorised by the Institute of Chartered Accountants in England and Wales (ICAEW) to carry out audit work and as such is subject to oversight by the Institute’s Quality Assurance Department (QAD). In addition, the firm is subject to review by the Audit Quality Review Team.
In 2012, the firm received an audit monitoring visit by the QAD. The visit took place in March 2012 and the report, which was finalised in August 2012, confirmed the continuance of the firm’s audit registration.
In consequence of its membership of PrimeGlobal the firm is subject to review by that organisation and as a result of contracts held with the Audit Commission and European Commission it is also subject to periodic review by those organisations.
Public interest clients
UK listed audit clients:
Athelney Trust plc
The firm’s independence procedures, which are set out in its Audit Manual, are designed to ensure compliance with the Auditing Practices Board Ethical Standards and the ICAEW Code of Ethics. The procedures include:
- Completion on an annual basis of independence and confidentiality statements by all partners and staff;
- Assessment of independence and compliance with ethical requirements by Responsible Individuals when considering acceptance of new clients, signing audit reports and considering reappointment as auditors; and
- Procedures to identify potential conflicts and the resolution of the same including reference to the firm’s Ethics Partner.
An annual internal review of audit independence practices is carried out by the Audit Compliance Partner together with an assessment of independence matters for non-audit services. The Audit Compliance Partner completed a review of independence compliance during January 2012. Subsequent to the year end, a further review is planned for completion in January 2013.
Continuing professional education of partners and staff
Clement Keys has in place an ongoing training programme for all staff throughout their career.
All student trainees attend an in-house series of courses over the period of their training contract which is designed to supplement their professional qualification training. These courses cover areas such as ethical standards, Clement Keys’ audit approach, use of audit, accounts and taxation software and soft skills such as letter and report writing.
All other professional staff attend regular technical update courses provided both in-house and by an external professional training provider. These courses are selected by the technical partner and technical director and are designed to ensure that all staff keep abreast of technical developments in audit, accounting and taxation. In addition the firm provides courses on personal development and staff are encouraged to identify and attend courses that are relevant to their specific area of work.
Formal training courses are complemented by on the job training, coaching and mentoring.
Staff are responsible for maintaining their own continuing professional development records and maintenance of the same is reviewed as part of the firm’s staff appraisal programme. As part of the appraisal process, individual professional development needs are reviewed and training opportunities are identified.
The firm is Investor in People accredited.
Year ended 30 September 2012
Audit fees 2.0
Fees charged to non-audit clients 4.4
Total turnover 6.4
Equity Partners are remunerated solely out of the profits of the firm. The profit sharing arrangements are set on an annual basis by the equity partners and comprise three elements - management responsibility, performance and return on capital.
The remuneration of Partners who are Responsible Individuals is not linked to the provision of non-audit services to their audit clients.
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