Independent and objective: putting the right structures and people in place

When I’m asked about leading a firm during a global pandemic I often respond with the comment that I’ve learned more about being a chief executive in the past three months than I would have done in three years.

And I don’t necessarily just mean about operations or strategy, but about the cultural and reputational aspects of what a firm needs to do in order to succeed for the benefit of its employees and for wider society.

For example, I’ve written before in my blogs about the importance of trust in business, and this issue has been truly magnified throughout the crisis. Much of the professional services industry, including my own firm, has faced criticism about a lack of transparency and accountability. So that’s why I’m pleased to be able to announce a series of changes to address those concerns, and demonstrate our commitment to transparency, strong governance and the public interest.

A watchful eye

The criticisms our industry has faced have predominantly been aimed at audit and the auditors. With headlines of business failures and fraud, there have been questions over the purpose and role of auditors and the ongoing perception that their independence is clouded by conflicts of interest.

So we’ve established an Audit Governance Board (AGB) that will provide independent oversight for Deloitte’s UK audit practice. The AGB will focus on the policies and procedures for improving audit quality but also ensure the Financial Reporting Council’s objectives of operational separation are met. While the deadline for operational separation is not until 2024, I believe it’s critical that we move quickly to implement the principles and show commitment to making necessary reforms.

But governance will only be as good as the calibre of those with the power to scrutinise. We’ve made sure that the directors on our new AGB bring diverse and extensive experience as well as independent rigour to our audit practice.

We’ve appointed Margaret, Baroness Ford of Cunninghame OBE, as the independent non-executive chair of the AGB. She brings over 25 years’ experience as a non-executive director and chair of private, listed companies and government bodies. Baroness Ford will be joined on the AGB by other prominent independent non-executive directors, including Jim Coyle, Almira Delibegovic-Broome QC and Shirley Garrood.

Of course, while governance changes are a key element of audit reform, they must also be considered alongside a wider package of change, including in areas such as corporate reporting, the role of directors, the evolution of the audit product and the regulatory environment.

The need for agility

As well as reinforcing the need to continue to build trust in our firm and our brand, the past few months have also demonstrated to me just how important it is for businesses to be agile in how they make decisions.

As CEO of both Deloitte in the UK and Deloitte North and South Europe time was never something I had in abundance! But recent months have shown the need to have more time to focus on strategic and market issues. With that in mind, I’m delighted that our current head of Audit & Assurance, Stephen Griggs, will take on the role of UK Managing Partner. In these extraordinary market conditions, it’s important that we have dedicated UK business leadership - and the agility - to navigate the volatility and uncertainty.

Stephen will be responsible for business performance, operations and public policy for Deloitte UK. We’ll work closely together as I remain the UK CEO – with Stephen leading on all operational matters which, importantly, will include overseeing operational separation as part of audit market reforms.

Speaking to colleagues, they know that the work they do will always (rightly) attract scrutiny. It’s not only my responsibility, but it's my personal commitment to ensure that our firm meets the expectations of all our stakeholders on both transparency and accountability.