2023 BDO Audit Quality Report

Cultivating the SEED of Audit Quality

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“In our 2023 Audit Quality Report, we highlight several of the more recent significant and transformative investments demonstrating our commitment to promote audit quality. These changes are multifaceted and interdependent, and not just to be embraced by our professionals, but embedded in our processes, decisions, and daily work. While it will take time to benefit fully, our leadership and professionals are engaged in this journey and are committed to strengthening our operational excellence."
- Wayne Berson, CEO | Bill Eisig, Assurance National Managing Principal | Lillian Ceynowa, Assurance National Managing Principal, Audit Quality 

2023 BDO Audit Quality Report Highlights

Our Audit Practice Metrics

Percentage charts showing women professionals and racially/ethnically diverse professionals.

AVERAGE ASSURANCE RETENTION RATES THE YEAR ENDED 12/31/23

Bar chart for average assurance retention rates in 2023.

INNOVATION, CAPACITY, AND AUDIT EXECUTION

LEARNING & DEVELOPMENT, AUDIT QUALITY CONTRIBUTIONS, IT ASSURANCE AND SUBJECT MATTER SPECIALIST SUPPORT

On average, our assurance professionals completed 2 to 3 times the average annual CPE hours required by professionals standard setters

Delivered 81,000+ hours of learning through our new Audit Quality Learning Journey programs

Over 413,000 audit quality hours contributed by Professional Practice, Quality Management, Independence, and Inspection professionals.

15% of audit hours performed by IT, tax, and auditor specialists at BDO.

Ratio of professionals at BDO by department.

CONTRIBUTIONS TO THE SUSTAINABILITY OF OUR FIRM, PROFESSION AND COMMUNITY

~10,000 
Eligible BDO employees in the U.S. participating in BDO’s ESOP. The ESOP offers participants a stake in the firm’s success through beneficial ownership, fueling quality, ongoing investment, and growth for a sustainable future.

60+ 
BDO principals and directors previously or currently serving in 90+ positions within professional and global organizations that have a direct impact on advancing audit quality.

24% 
BDO principals serving as board directors or officers of charitable and nonprofit organizations.

MONITORING AUDIT QUALITY

177 
Engagements internally inspected in 2023.

79%  
Internally inspected engagements (issuers and non-issuers) were conforming. 

98% 
Average percentage of engagements inspected by the PCAOB over the last three inspection cycles that did not result in a restatement of a financial statement or Internal Control over Financial Reporting (ICFR) opinion. 

By integrating quality into the firm’s strategy alongside growth, investment, and stewardship, we’ve created a robust governance structure that emphasizes audit quality. The restructured Assurance Operational and Professional Practice is designed to streamline leadership from local to national levels, enhancing consistency, accountability, and quality across markets. This optimized structure, coupled with the expansion of our Audit Quality Advisory Council  (AQAC) to include two independent members, underscores our commitment to elevating audit quality through transparent governance and leadership.

We recognize ethics and independence as the primary foundational pillars for maintaining the integrity of the auditing profession and the trust of the public. The firm has well-established policies, continuous education, and monitoring systems to ensure compliance with ethical requirements, including independence. This commitment is reflected in the adoption of new tools and resources, enhanced sanctioning guidelines for non-compliance, and a culture that prioritizes ethical behavior and independence across all levels of the organization.

Our procedures for accepting new clients and continuing engagements are rigorous and focused on aligning with clients who share our firm's commitment to quality. These procedures involve assessing risks, aligning the team's competence, industry experience, and capacity to match client needs, and evaluating the integrity of client management, thereby maintaining the ability to execute high-quality audits.

Our assurance policies and procedures are designed to ensure that our audits meet all applicable professional standards, legal and regulatory requirements, as well as our specific quality management standards. To ensure consistency in conducting risk-based audits, the firm has developed and continues to enhance a global audit methodology, related tools and templates, and standardized forms of documentation.

We continuously refine our BDOADVANTAGE digital audit suite to enhance the client experience, tackle current and emerging risks and opportunities, and apply data-driven approaches and strategies to bridge the differences between current state and ideal state. We are particularly focused on practice management, workflow and engagement quality automation, and complex and predictive analytics.   

Building a pipeline of diverse talent, seeking feedback and input about our culture and work environment, transforming our business model to ensure the economic future of our employees and drive quality and sustainability, providing continual education for all levels, building our capacity with qualified resources and managed workloads while holding our professionals accountable for their performance – these are a few of the many ways that demonstrate our focus on our people to enhance audit execution.

Communication with all our stakeholders is vital for supporting audit quality. This includes identification of relevant and reliable information and ensuring it is consistently and accurately relayed. Internally, our leadership restructuring and nationalization of certain critical roles has streamlined the ability of those in the field to timely inform decision-makers about what is working or where there are opportunities for improvement. Externally, we leverage our technology, templates, and subject matter specialists to keep both management and the audit committee not only informed of our work but also to provide valuable and timely insights and education significant areas of focus and emerging risks and opportunities. 

BDO maintains a robust system of quality management (“SoQM”) designed to provide reasonable assurance that our professionals fulfill their responsibilities and conduct compliant engagements. Activities that include monitoring of engagement level compliance with firm policy and professional standards, direct monitoring of the firm’s SoQM, and performing thoughtful and deep root cause analysis, provide valuable information being used to continue to improve audit quality.