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The AFM concludes that risks outweigh opportunities, given potential pressure on audit quality, structural improvements, independence, confidentiality, and the balance between commercial incentives and public interest.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/research-report/","Research & 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presence in Dutch statutory audits?","Question",{"text":63,"@type":64},"The share of statutory audits performed by non-PIE audit firms collaborating with private equity has risen rapidly to around 30%.","Answer",{"name":66,"@type":61,"acceptedAnswer":67},"What kinds of risks does private equity create for statutory audit quality?",{"text":68,"@type":64},"Risks relate to long-term pressure on audit quality from commercial incentives, including insufficient investment in structural improvements and threats to independence and confidentiality, such as non-audit services to audit clients.",{"name":70,"@type":61,"acceptedAnswer":71},"How does the AFM supervise audit firms that work with private equity?",{"text":72,"@type":64},"The AFM supervises the ownership structure to ensure voting rights remain with auditors or audit firms, maintains frequent dialogue with collaborating firms, and includes private equity as a risk indicator in its 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of non-PIE audit firms with private equity investment has grown rapidly to around 30% . The effects of private equity investment therefore merit further examination. We see opportunities for private equity in the short term and risks in the long term. Our data analysis shows that changes are already occurring. The AFM believes the risks outweigh the opportunities. It is important that audit firms that engage with private equity focus on the public interest and prioritise the quality of statutory audits.  \nREPORT  \nANALYSIS  \n1  \nCollaboration between the auditing industry and private equity is increasing  \nThe share of statutory audits performed by audit firms that collaborate with private equity is increasing: this year it is estimated to be 30% .   \n11% 21% 30%  \n2023 2024 2025  \n2  \nChanges are already visible  \nThe e􀀄ects will mainly be seen in the long term. However, our data analysis already points to short-term changes in four indicators.  \nEach dot represents one or more audit firms having the same private equity investor.  \n Decreases  None  Increases  \n-60 0 60 120  \n-60 0 60 120  \n-60 0 60 120  \n-60 0 60 120  \nDecreases Increases  \n8 APRIL  \nDi􀀁erence (%) between before and after the private equity interest or collaboration, in …  \n% of audits in which quality control methods were used  \naverage number of significant risks identified per statutory audit  \n% of hours spent by a statutory auditor relative to the total number of hours  \n% of engagements where one or more independence threats were identified  \nREPORT  \n1. Contents  \n1. Summary 3  \n2. An introduction to private equity in the  \nauditing industry 4  \n3. Opportunities and risks of private equity investments  \nin the auditing industry 6  \n3.1 Opportunities 6  \n3.2 Risks 6  \n4. Private equity investments in other public  \ninterest sectors 9  \n4.1 Limits on private equity investments 9  \n4.2 Effects of private equity investments in other industries 9  \n5. Initial analysis of short-term effects of private equity in the auditing industry 11  \n5.1 Use of quality controls 12  \n5.2 Identification of significant risks 13  \n5.3 Involvement of the statutory auditor in the statutory audit 13  \n5.4 Identification of threats to independence 14  \nANALYSIS  \n6. The AFM pays attention to private equity in its supervision 15  \nAppendix 1: Bibliography 16  \nAppendix 2: Explanation and justification of conducted data analyses 18  \nREPORT  \nANALYSIS  \n2. Summary  \nPrivate equity firms are increasingly investing in the Dutch auditing industry. In the space of a few years, the share of statutory audits performed by non-PIE audit firms that have joined forces with private equity has risen rapidly to around 30% . The time is therefore right for the AFM to review the effects of private equity. There are both opportunities and risks, but the AFM still believes the risks of private equity outweigh the opportunities. After all, auditors have an important public task. By performing audits of (annual) reports and giving an opinion on them, the auditor builds societal trust. The importance of carrying out these checks properly can come under pressure because of commercial incentives. Private equity in the audit industry may put further pressure on this fragile balance. Hence there is a constant need for counterpressure to be exerted internally (from the audit firm itself) and externally (from the AFM) .  \nThe opportunities of private equity  \nWe see that private equity can offer short-term solutions to the challenges facing the Dutch auditing industry. Opportunities include economies of scale, the contribution of expertise, investment power and ensuring a stronger competitive position. It can also provide a solution to the succession problem experienced by some audit firms.  \nThe risks of private equity  \nIn the long term, we also see risks, particularly with regard to the pressure that can aris","cbCaicp0B8kmCgNq","https://ap.wps.com/l/cbCaicp0B8kmCgNq","pdf",256787,"English","# Contents\n## Summary\n## An introduction to private equity in the auditing industry\n## Opportunities and risks of private equity investments in the auditing industry\n## Private equity investments in other public interest sectors\n## Initial analysis of short-term effects of private equity in the auditing industry\n## The AFM pays attention to private equity in its supervision\n## Appendix 1: Bibliography\n## Appendix 2: Explanation and justification of conducted data analyses","[{\"question\":\"How large is private equity’s presence in Dutch statutory audits?\",\"answer\":\"The share of statutory audits performed by non-PIE audit firms collaborating with private equity has risen rapidly to around 30%. \"},{\"question\":\"What kinds of risks does private equity create for statutory audit quality?\",\"answer\":\"Risks relate to long-term pressure on audit quality from commercial incentives, including insufficient investment in structural improvements and threats to independence and confidentiality, such as non-audit services to audit clients.\"},{\"question\":\"How does the AFM supervise audit firms that work with private equity?\",\"answer\":\"The AFM supervises the ownership structure to ensure voting rights remain with auditors or audit firms, maintains frequent dialogue with collaborating firms, and includes private equity as a risk indicator in its supervision.\"}]","Private equity in the auditing industry - public interest under pressure | PDF"]