In 1992, Len Jui was standing at the back of the room in Beijing watching the signing ceremony for a 20-year joint venture agreement between the Chinese government and the then Big Six auditing firms. “I was a young auditor with just three years’ experience, and I thought 20 years would be such a long time,” he remembers.
Fast forward to 2012, and Jui was witnessing the dissolution of the joint venture. “I thought, ‘oh my God, I witnessed the first day and the last one.’ In between, I had moved around a lot and never thought I would be back there to witness the end. When I look back, it is part of history,” he says.
Jui, who is currently Deputy Chair of the International Auditing and Assurance Standards Board (IAASB) and Head of Public Policy and Regulatory Affairs at KPMG China, started his career in 1989, working for Ernst & Young in Miami in the United States. He had been with the firm for three years, when he received a call from Arthur Andersen, asking if he would be interested in helping to set up its practice in Mainland China.
Jui jumped at the chance. “It was a wonderful experience because basically everything was starting from scratch – 1992 was a turning point for China’s audit profession,” he remembers. He worked for Arthur Andersen for three years, during which time he assisted with seven initial public offerings (IPOs) on the Shanghai Stock Exchange and helped a number of multinational corporations get a foothold in China through investments and partnerships.
In 1995, he received a call from a headhunter asking if he would be interested in joining a multinational telecoms company in the U.S. “In the late 1990s, telecoms and Internet infrastructure was a hot industry. There was deregulation of the global telecoms industry and I thought it would be interesting to enter it. I joined as a regional chief financial officer and later became CFO for the Asia Pacific region.”
He stayed with the company for six years, during which time it did an IPO in the U.S., but by then, he had a young family and had been out of the U.S. for nearly nine years and was ready to go back home. Though a number of different options were open to him, the one that most interested him was taking up a post at the U.S. Securities and Exchange Commission (SEC) in Washington, D.C. as associate chief accountant in the Office of the Chief Accountant. “After working as a public accountant and for a public company, regulation and standard setting intrigued me. But it seemed like a black hole and you didn’t know exactly what the regulators were thinking or how they set the rules and regulations.”
“I took on the role of Deputy Chair to promote the use of IAASB standards globally and engage stakeholders to promote the role of the audit profession.”
He adds that with two young children, the prospect of having a job that did not involve a lot of travel, enabling him to spend more time at home, also appealed. Looking back, he says it was the best career decision he ever made. Jui spent eight years at the SEC overseeing international accounting and auditing standards and international audit regulation.
He was only a few months into the job when Enron went bankrupt and the accounting scandal that was uncovered led to the dissolution of Arthur Andersen. “Following Enron and other corporate failures, the U.S. Congress passed a number of laws and regulations to promote greater corporate governance and more accountability for management, as well as the audit profession. I saw the timing as being good luck, rather than something bad, as it meant I was able to participate in a number of these regulatory and legislative changes,” Jui says.
He adds that once these changes had been made in the U.S., regulators in other jurisdictions, including in Europe, the United Kingdom and Japan, started to look at bringing in similar rules. “I was able to work with a number of regulators around the world, representing the SEC, changing the way audits are done and bringing more accountability to the audit profession,” he says.
In 2008, Jui was approached by KPMG to work in Beijing. “I decided it was a good move. I wanted to see how all the new rules and regulations had impacted the profession, so I joined KPMG and have been there ever since,” he says.
Building consensus
Jui became a member of the IAASB, which sets quality international standards for auditing assurance and quality control, in 2017 and was appointed as Deputy Chairman at the beginning of this year. He was first attracted to joining the IAASB by the prospect of helping to promote audit quality, a key driver of which is having high quality auditing standards. “I took on the role of Deputy Chair to promote the use of IAASB standards globally and engage stakeholders to promote the role of the audit profession.” He sees his role as having two main functions, namely building consensus and conducting outreach work.
Jui credits his time at the SEC as being particularly helpful to him in his work for the IAASB.
“When I was at the SEC, I worked with a number of regulators around the world, as well as professional bodies, including the Hong Kong Institute of CPAs, to gain the views of the international community in promoting audit quality and building consensus.”
When setting standards, he points out that it is important not only to consider views from the profession, but to also think about the people and institutions that use audits and financial statements, particularly investors. “Having previously been a regulator, as well as having been in practice for the past 13 years – and as an investor myself – I bring a different view,” he says. “Most of the members of the IAASB have either been in the profession or been a regulator all of their lives, so they bring a specific perspective to the standard setting process. As Deputy Chair, I try to reconcile those different perspectives and understand where they are coming from. Being willing to listen to issues and understanding the perspectives of others are fundamental to the work to reconcile differences and find common ground to formulate high quality standards for global adoption.”
He adds that as the IAASB is an international organization, it is particularly important that he is sensitive to regional and cultural differences, pointing out that regions such as Europe and Asia Pacific should not be treated as if they are one entity, as the countries within them have very different perspectives, for example, Japan has a very different culture to China, even though they are both in North Asia.
Jui describes the second part of his role as being an ambassador for the IAASB and promoting international standards and their adoption, and conducting outreach work to encourage convergence. “I can’t travel due to COVID-19-related travel restrictions, but I still talk to a lot of different regulators. While I am promoting the standards, I listen to their needs and whether there are any challenges in implementing the standards in their country. The deputy chair has to be aware of what is going on around the world and make sure the standards are fit for purpose for different countries,” he says.
As Deputy Chairman, Jui appreciates the opportunity he has to continue learning on the job. He also enjoys meeting new people from different cultures and understanding their point of view and learning about how international standards are impacting local practices. “People are very passionate about their own perspective, but the challenge of building consensus also represents what I like about working at the IAASB,” he says.
Len Jui was appointed as Deputy Chair of the International Auditing and Assurance Standards Board (IAASB) at the beginning of this year. He is responsible for pushing the IAASB’s standards and engaging stakeholders to promote the role of the audit profession.
New standards
The IAASB recently published three new Quality Management Standards on auditing, which come into effect in December 2022. Jui explains that the standards aim to make sure that audits are performed to the highest standard, particularly as many firms now conduct them across a number of different countries.
They also aim to make sure firms have a culture of quality, and that leadership focuses on quality over financial results. In addition, they aim to safeguard the sustainability of the audit profession following corporate failures in which the role of the auditor has been questioned.
The new standards also move from a compliance-based approached, to a more proactive, risk-based one. Jui explains: “In the past, it was more of a checklist approach. Now, a firm’s leadership must take a more proactive approach to manage quality through a series of policies and processes to be able to demonstrate that it has an effective system of quality management to ensure all audit opinions signed are appropriate in the circumstances.”
He is also chairing a task force looking at the audit of group financial statements, focusing on how audit engagements across multiple different jurisdictions are conducted. He explains that the task force is looking at how teams performing engagements in different parts of the world are impacted when local laws and regulations prevent them from sharing information with members in other jurisdictions, as is the case in Mainland China. The standard should be finalized by the end of 2021. Jui expects it to enhance the quality of audits of group financial statements and promote greater consistency in practice. “I expect clearer guidance on what the group auditor needs to do to take responsibility for the audits and improve communications between members of engagements who perform audit work at the component level and the group auditor. We are also looking to clarify audit documentation requirements based on the input from the regulatory community.”
Jui is also involved in a project on fraud led by the IAASB in response a growing number of corporate frauds taking place globally. “We are looking at the role of the profession in detecting fraud and working with regulators and other stakeholders to make sure the standards can be revised to reinforce some of the professional accountants and auditors’ responsibilities in detecting fraud. We are also trying to understand the responsibility of management and corporate governance as well,” he says. The project aims to determine whether, and to what extent, the IAASB should take further action, such as possible future standard setting, or the issuance of non-authoritative guidance, to address the issues and challenges that have been identified relating to fraud in an audit of financial statements.
“This project is currently in the information gathering and research phase, which will be used to inform future IAASB decisions about its activities relating to fraud in an audit of financial statements,” Jui says.
“In the past, it was more of a checklist approach. Now, a firm’s leadership must take a more proactive approach to manage quality through a series of policies and processes.”
Born in Taiwan, Jui attended boarding school in the United Kingdom and has also worked in the United States. He is now based in Beijing.
Adapting to the pandemic
Unsurprisingly, Jui says the COVID-19 pandemic has had a significant impact on the work of the IAASB and auditors more generally. He points out that with travel restrictions in place, the board and various task forces can no longer meet in person, and instead have to hold virtual meetings. “One of the keys for us to perform effectively is in-person meetings with discussions and brainstorming sessions. We are scattered around 18 different time zones, so someone in New Zealand has to wake up at 1 a.m. or 2 a.m. for a meeting. Virtual meetings are condensed into three hours, compared with a full day for in-person ones, and they are less effective as we can’t draw diagrams. It is very challenging.”
But he adds that the pandemic has also had an impact on audit professionals, who are unable to travel, both overseas and within a country, and often have to conduct audits virtually. “They may not be able to travel to their client’s office to look at their books and records, and look for evidence of fraud. They can’t check inventories, such as through stocktaking or counting fixed assets,” he says. To support auditors in the important role they play in sustaining trust in financial reporting, the IAASB has published six Staff Audit Practice Alerts addressing topics such as “Areas of Focus in an Evolving Audit Environment Due to the Impact of COVID-19” and “Going Concern.”
But Jui points out that firms are responding to the situation, and the pandemic has provided an opportunity for them to develop the technology needed to conduct audits remotely, such as using robotic technology to do inventory observations. In response, the IAASB has set up a Technical Working Group (TWG) to explore emerging developments in the effective and appropriate use of technology, including data analytics, to enhance audit quality, and how it can most effectively respond to these developments through new or revised International Standards on Auditing or non-authoritative guidance, and in what timeframe. “On 18 March, the TWG released non-authoritative support material to help auditors address the risk of over-reliance on technology, whether it arises from using automated tools and techniques or from using information produced by an entity’s systems,” Jui says.
An international life
Jui was born in Taiwan. When he was 13, he was sent to a boarding school in the U.K., which he describes as being very progressive and in the middle of nowhere surrounded by farms in Devon. Many of his friends were the children of British expats working abroad, and he remembers spending holidays with them and listening to their parents talk about life in countries such as India and Australia. “It shaped my personality and views. It opened up my mind and made me want a career that enabled me to travel and see different parts of the world,” he says. By the time he had finished school, his parents had emigrated to the U.S., and he went to the University of Miami. He jokes that he did not have the brain to be a scientist or a lawyer, so he opted to become an accountant, studying business administration and accounting.
He looks back on the period as being a difficult one. “I had never been to the U.S. before. I was 19 and I found it difficult to adjust coming from the U.K. U.S. society is quite different to U.K. society and my family’s heritage of being East Asian. I am melting pot of different countries, cultures, educations and mindsets.”
Jui now has two children who are based in the U.S. His daughter, who is 25, works for EY, while his son, who is 21, is due to graduate from university in 18 months.
When he is not working, Jui is a keen photographer, a hobby he first took up when he was living in rural Devon. He also developed a passion for English football while he was in the U.K. “I have been supporting Manchester City since 1976, so no one can accuse me of just following a rich club,” he laughs, “I went through 35 years of watching them get beaten up by Manchester United, relegated to the third division and not winning a trophy for over three decades. To be a true fan, you really have to have been through that whole ride.
The IAASB’s three new Quality Management Standards will come into effect in December 2022. They aim to make sure firms have a culture of quality, and that leadership focuses on quality over financial results. They also aim to safeguard the sustainability of the audit profession following corporate failures in which the role of the auditor has been questioned. Read more about the standards in this month’s accounting feature.
