Transparency Report

This report by Watson Buckle Ltd (Watson Buckle or “the firm”) has been prepared to meet the requirements of the EU Audit Regulation 537/2014 Article 13 for the year ended 31 December 2018.

A Transparency Report is required as the firm receives fees for the audit of a Public Interest Entity (PIE).

The information provided in this report reflects the position at 31 December 2018.

Legal Structure

Watson Buckle is a Limited Company registered in England and Wales. It is wholly owned by its Directors, who are commonly referred to as “partners”. At 31 December 2018 there were 5 partners.

Our principal services are audit, accounts and tax compliance: business and personal tax consultancy: trust and estate planning and corporate finance:.

International arrangements

Watson Buckle Ltd is an independent member of MGI Worldwide.

MGI Worldwide is a top 20 international network of independent audit, tax accounting and consulting firms comprising 148 member firms with 263 offices in 92 countries worldwide.

MGI Worldwide is the brand name under which certain member firms of Mint Alliance operate as a network. Mint Alliance is a private company limited by guarantee incorporated in the Isle of Man with company number of 013238V.

The association has been meeting the needs of clients with interests in more than one country for over 70 years.

Each MGI Worldwide member is an independent legal entity in its own country. MGI Worldwide is a non-profit making network of independent firms and does not itself practice in the field of accountancy and does not provide business advisory services. Such services

are provided by the independent member and correspondent firms of MGI Worldwide.

Governance structure

Joint Managing Directors (MD’s): Susan Sedgwick & Mark Wilcock

Executive Committee

The Executive Committee is made up of the 5 partners who are responsible for overseeing the firm’s strategy and protecting the interests of its members. The committee meets quarterly.

Watson Buckle’s constitution is contained in the Memorandum and Articles and Shareholders Agreement

The Executive Committee currently comprises the following:

Susan Sedgwick     Joint MD

Mark Wilcock          Joint MD

Chris Padgett          Director

Ian Gill                    Director

John Kinsella          Director

The Executive Committee continuously monitors developments in governance and benchmarks the firm’s performance against them. In addition, Watson Buckle embraces best practice in a way that is relevant to its activities, the risk environment it faces and the needs of its clients and people.

Risk management

The Executive Committee is also responsible for advising on the key risks the firm faces and the effectiveness of the systems to control those risks. Watson Buckle has identified four principal areas of risk: financial, operational, strategic and professional.

  • Financial risks include working capital, liquidity and credit risk, which are managed by regular monitoring and review of exposure.
  • Operational risk is mitigated by a system of formal controls and processes and is backed up by the firm’s business continuity plans. Financial and operational risks are the responsibility of the Joint Managing Directors, operating in conjunction with the other members of the executive committee.
  • Strategic risk is monitored through the Executive Committee which has overall responsibility for overseeing the direction of the business.
  • Professional risk is managed by seeking to ensure the quality, objectivity and independence of client services, through the provision of guidance and oversight on client acceptance and the conduct of professional services.

Quality control system

For audit and other assurance engagements, the firm’s system of quality control provides reasonable assurance that the firm, its partners and staff comply with relevant professional standards and regulatory and legal requirements and that reports issued by the firm are appropriate in the circumstances.

  • Leadership responsibilities
  • Ethical requirements
  • Acceptance and continuance
  • Human resources
  • Engagement performance
  • Monitoring

We believe that our quality control system is operating effectively and enables us to meet our objectives as set out above.

Leadership responsibilities

The firm’s quality control system includes the following elements:

Ultimate responsibility for the firm’s system of quality control lies with the Joint Managing Directors.

The firm and the individuals with responsibility for various aspects of quality control, ensure that the overriding requirement for quality in everything that the firm does is reinforced by clear, consistent and frequent messages and supported by the firm’s actions. The firm’s commitment to quality and the quality control procedures needed to ensure that it is achieved, are embedded in its training and technical materials and communicated through both formal newsletters and through informal and ad hoc forms of communication.

The skills, knowledge and commitment of our people are fundamental to Watson Buckle’s continued success. Our reputation is founded on professionalism, service and dedication. At the heart of Watson Buckle are five core values which are the foundation of our culture and are apparent in everything that we do:

  • Trusted
  • Technical
  • Bespoke
  • Value
  • Service

Each value outlines our commitment to delivering outstanding service.

Ethical requirements

Professionalism, ethics and independence take precedence over all other aspects of the firm’s work. Responsibility for the firm’s policies and procedures lies with the Ethics Partner, Susan Sedgwick,  who also provides confidential advice and guidance to other partners and members of staff on professional ethics.

The firm’s policies and procedures meet or exceed the requirements set by the Institute of Chartered Accountants in England & Wales and the Financial Reporting Council.

Induction training for all new partners and staff includes an introduction to our ethical and independence policies. Further training on the firm’s policies and procedures in relation to professional ethics is provided regularly and always when rules or policies and procedures change significantly.

The firm, both internally and through working with other member firms of MGI Worldwide, ensures that it has appropriate mechanisms in place to guarantee that it has a central and up-to-date record of the scope of work undertaken in respect of every client, and can evaluate the overall effect that this has on the firm’s independence.

The firm obtains confirmation of compliance with independence requirements from all partners and staff both when they join the firm and at least annually thereafter.

Partners and staff (including immediate family members) are not permitted to hold shares in the companies listed on our database of prohibited investments.

Compliance with the firm’s independence procedures is covered within the annual review of the firm’s compliance with applicable regulatory requirements.

Acceptance and continuance

For new assignments, a thorough client engagement process is conducted that covers anti-money laundering, ethical issues and other professional risk assessment measures.

Every potential audit client is considered in relation to:

  • the reasons for the proposed change in auditor and through making enquiries of the predecessor auditor
  • potential independence risks and possible conflicts of interest
  • the firm’s resources and experience, to ensure that the firm will be able to complete the assignment to the highest professional standards
  • the management and ownership of the potential client, including confirming the identity of individuals
  • the potential client’s business and the risk associated with the industry or area within which it operates.

Human resources

The firm’s systems, policies and procedures are designed to enable us to provide the highest quality of professional services, but a professional service firm is only ever as good as the people within it.

To ensure partners and staff have the capabilities, competences and ethical standards to provide the quality of audit work required, the firm has clear policies and procedures covering:

  • Recruitment
  • Regular evaluation of performance
  • Capabilities and competences
  • Career development and promotion
  • Compensation
  • Estimation of staff needs

The firm seeks to recruit individuals with integrity, intelligence, motivation and the ability to progress. Staff are evaluated regularly, taking into account their performance in the period under review and aiming to identify any ways where the firm can assist in ensuring that they continue to progress to be able to meet their full potential. The frequency of evaluations depends on the level of the individual, with some junior staff assessed at the end of larger individual assignments and others evaluated on a six-monthly or annual basis.

All RIs are qualified with the ICAEW/ ACCA and all audit staff are either qualified or are training.

Engagement performance

All audit engagements are undertaken using the firm’s common audit methodology, which has been developed internally. This methodology is applied within the firm’s audit software, which has been obtained from leading commercial suppliers.

The methodology covers all aspects of the audit process including:

  • Risk assessment and audit planning
  • Briefing of audit staff
  • Performance of audit fieldwork
  • Documentation of audit fieldwork
  • Supervision of staff and review of work performed
  • Consultation
  • Review
  • Reporting in accordance with applicable legal and regulatory requirements

Audits of public interest entities and other high risk assignments are subject to an engagement quality control review by an experienced audit partner with no other involvement in the provision of services to that client.

Clients with certain risk characteristics are also subject to review by a second audit partner, looking specifically at the relevant risk area and/or a full review of the audit file by members of the firm’s compliance team.

The firm has a policy of rotation of “RIs” based on the recommendations contained in the FRC Ethical Standards and the ICAEW Code of Ethics.

Monitoring

In addition to the monitoring of active audit files by an engagement quality control reviewer, second partner or member of the compliance team, the firm also operates a system of internal ‘cold’ audit file reviews on an annual basis. The programme of audit file reviews ensures that the quality of work of all audit partners is reviewed regularly on a cyclical basis. The selection of audit files for review is randomly chosen from each RI Audit portfolio.

Such reviews are intended to ensure audit work has been undertaken in accordance with applicable

standards and regulations, that the firm’s policies and procedures have been followed and that the audit reports provided are supported by sufficient and appropriate audit evidence. 

The regulatory environment

Watson Buckle is registered to undertake audit work by the Institute of Chartered Accountants in England & Wales (ICAEW). With effect from 1 May 2015 the Audit Quality Review (AQR) team of the Financial Reporting Council (FRC) is responsible for inspection of our work in respect of “public interest entities” and our whole firm audit procedures. Our other audit work is examined regularly by the ICAEW’s Quality Assurance Department (QAD). The most recent examination by the QAD took place onsite in June 2018. The examination identified no major issues with regard to the firm’s audit clients generally. There were no significant thematic issues. The firm has addressed the key findings identified and the firm’s audit registration is continuing.

The firm is also subject to Practice Assurance reviews by the ICAEW Quality Assurance Department, which cover client services not otherwise regulated. Senior management considers recommendations made by regulators and takes action to implement appropriate changes. At the last Practice Assurance Visit by the ICAEW there were no major issues raised nor recommendations made.

Public interest audit clients

A list of the public interest entities, for whom Watson Buckle carried out a statutory audit during the year ended 31 December 2018 is provided in Appendix 1.

Continuing professional development

The firm has created and maintains up-to-date, comprehensive, online reference databases and materials including specialist industry materials. These cover all aspects of policy, procedure and methodology as well as containing a complete library of UK and international accounting, auditing and ethical requirements.

To support and keep theoretical knowledge up to date, all partners and staff eligible for appointment as statutory auditors receive regular communications on technical and regulatory topics as they arise.

The technical services team provides consultation support on all aspects of auditing, accounting and regulatory requirements including arranging access to subject matter experts in specialist industries as necessary.

The firm’s internal training curriculum provides a broad range of technical solutions as well as business and personal skills programmes. Partners are required to participate in the internal objective setting and related performance appraisal processes. Through this they assess their on-going personal development needs and identify applicable development activities.

Financial Information

An analysis of the turnover of Watson Buckle Ltd for the financial year ending 31 December 2018 in respect of public interest entities is shown below:

  2018 2017
  £’000 £’000
Audit services Public Interest Entities 42 30

The amounts shown for audit services include statutory audits under UK legislation.

Partner remuneration

Partners are remunerated out of the profits of the firm. The final allocation and distribution of profit to individual partners is made in accordance with the Shareholders Agreement and once performance has been assessed and the annual financial statements have been approved by the Executive Committee.

Audit partner remuneration does not take any account of the selling of non-audit services to audit clients.

Publication

This report can also be found at www.watsonbuckle.co.uk/transparency-report/

Appendix 1: Public Interest Entities

This list includes audit clients for whom Watson Buckle Ltd have issued an audit opinion between 1 January 2018 and 31 December 2018. Where an audit client is a parent undertaking the list excludes any of its subsidiaries.

Public Interest Entities

The Equine and Livestock Insurance Company Limited – an insurance underwriter.