2017 PwC Tunisia Transparency reportAs you will see from this report, we invest significant time and...

2017 PwC TunisiaTransparency Report

Strictly privateand confidentialDraft

August 2017

PwC

August 2017Strictly private and confidentialDraft 3

2017 PwC Tunisia

A message from ourTerritory Senior Partner

Welcome to the PwCTunisia TransparencyReport. We issue thisreport to make certaininformation on our legalstructure independenceand quality assurance,publicly available.

We fully support these requirements forgreater transparency, which is aligned withour firm’s values.

I take this report as an important opportunityto share our values, build trust in the firm, setout our strategy, and explain our approach todelivering consistently high-quality audits.Our audit practice is a vital part of ourbusiness and a core part of our brand. Webelieve that we have an obligation to create alasting legacy that is founded not on short-term revenue growth, but on wider long-termobjectives – including continually improvingthe quality of our work, achieving greaterdiversity in our talent base, building ever-deeper client relationships, and making apositive economic and social impact.

We are very much aware of the position oftrust that we are granted by our clients,investors, and the community and we haveimplemented structures and standards toensure the ongoing independence andintegrity of all of our people in all of ouractivities and at all levels of our firm.

Our commitment to audit quality remains ourtop priority as it goes to the very heart of ourreputation and is driven from the top of ourfirm and embedded in our culture.

The expertise and diversity of our people isfundamental to our ability to deliver auditquality. We want to recruit the best people andwe now offer a number of different routes tojoin our firm including apprenticeships, ourpartnerships with universities and the moretraditional graduate entry schemes. We alsoinvest in training our people through ourpartnership programs with reputed universitiesin Tunisia.

As you will see from this report, we investsignificant time and resources in deliveringaudit quality and believe that our continuedfocus on innovation will yield furtherimprovements and value for our clients.The TLT of PricewaterhouseCoopersTunisia. (“PwC Tunisia”) approved thisreport and I signed it on its behalf on 30June 2017.

I hope that you enjoy reading this report.

Abderrahmen Fendri

Territory Senior Partner

Contents

PwC

August 2017Strictly private and confidentialDraft

Transmittal Letter 3

1 Legal structure and ownership 5

2 The Network 9

3 Governance Structure of PwC Tunisia 14

4 Internal Control and Internal Quality Control System 17

5 Internal Control and Internal Quality Control System (Keymessages)

26

6 External Leadership 27

7 Independence Policies and Practices 28

8 Our People 31

9 Financial Information 32

10 Remuneration of Partners 33

11 Public Interest Entities 34

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2017 PwC Tunisia

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Legal structure and ownership

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2017 PwC Tunisia

1 Legal structure and ownership

PwC Tunisia operates through 4 separateentities which are: “Conseil AuditFormation” (“CAF”), “Conseil AuditFormation Fiscal” (“CAF Fiscal”), “ConseilAudit Formation International” (“CAFInternational”) and “Les commissaires auxcomptes associés-MTBF”. Those entitiesare considered as limited liabilitycompanies under the Tunisian law (hereinafter referred as “PwC Tunisia”). We areregistered with the Tunisian Committee ofCertified Public Accountants.

a. Ownership of PwC Tunisia

PwC Tunisia is owned by individualspracticing audit, tax or consultingservices in Tunisia, commonly referred toas partners who hold the voting rights.

The majority of PwC Tunisia’s partnersare certified public accountantsregistered with the Tunisian Committeeof Certified Public Accountants. Thenumber of partners during the yearended 30 June 2017 was 8.

b. PwC Tunisia office structure

PwC Tunisia’s headquarters is located inTunis, the capital of Tunisia.

We had approximately 200 peoplesworking with us during the year ended 30June 2017.

c. Principal lines of business

PwC Tunisia operates through fourprincipal Lines of Service (LoS). These areAssurance, Consulting, Tax and Legal.

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The primary servicesprovided by each of thefour principal lines ofservice are as follows:

Assurance

Assurance, regulatory reportingand capital market transactions –statutory audit, financial accounting,corporate reporting, compliance with newand existing regulations and remediation,risk and regulatory monitoring,International Financial ReportingStandards (IFRS) conversion andassurance on capital market transactionsand listings and assurance on non-financial information.

Our other assurance services include:

Risk assurance- including IT riskassurance, business resilience, commercialassurance, performance assurance,treasury services and internal audit.

Actuarial- mergers and acquisitions,capital structuring, financial modelling,risk and capital management.

Tax

Tax – corporate tax advisory, tax ontransactions, transfer pricing, corporateand international tax structuring, financeand treasury, indirect taxes, property taxes,tax management and accounting services,dispute resolution, corporate taxcompliance and outsourcing, privatebusiness tax advisory, personal tax advisoryand compliance, tax valuations, municipaltaxes, industrial promotion, etc.

Consulting

Consulting – finance, strategy, deliveringdeal value, operations, people, technology,governance risk and compliance, enterpriseperformance management (processtransformation, systems implementationand application management), project andprogram management and cyber security.

Transaction services – buy and sell-sidefinancial and due diligence, commercial andmarket due diligence, structuring, sale andpurchase agreements, business modelling,valuations, bid support and defense.

Legal structure and ownership (continued)

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Consulting (continued)

Corporate finance – mergers andacquisitions advisory, private equity advisory,project finance and public privatepartnerships, debt advisory, public to privatetransactions and public company advisory.

Business recovery services – financialand operational restructuring, workingcapital management, corporate and personalinsolvency, independent business reviews,chief restructuring officers, interimleadership, optimized exits, acceleratedmergers and acquisitions, corporate liabilitymanagement, pension scheme creditadvisory, distressed property advisory andcorporate simplification.

Forensic services – disputes includingasset tracing, commercial, competition,intellectual property and shareholderdisputes, construction and insurance claims;investigations including anti- moneylaundering, fraud and corruption, anti-trust,fraud prevention, project delay analysis,royalty examinations and warrantycompliance.

Human resource services – reward andcompensation, employment services, pensionsand retirement, international assignmentsolutions, HR management including HRtransaction advice, human capital metrics andbenchmarking, HR function effectiveness andservice delivery.

Legal

Business Law- corporate law compliance,drafting of corporate documents, corporateregistration, legal due diligence, escrowarrangements, management contracts, take-overs,drafting of letters of intents and commercialcontracts, private and public bids, e-businesscompliance, trademarks, data protection,intellectual property

Labor and social security- remuneration,benefit plans, stock option plans, transfers ofpersonnel in mergers and acquisitions severance

International trade and customs- utilizationof free trade zones or special customs areas,application of international treaties and customduties preferences, transfer pricing, foreign trade,dumping, foreign exchange matters.

A full list of our servicescan be found at

http://tunisie.pwc.fr/

Legal structure and ownership (continued)

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We are one firm doingthe right thing for ourclients, our people andour communities.

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The Network

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2 The Network

PricewaterhouseCoopers’,‘PwC Network’ and ‘PwC’refer to the network ofmember firms ofPricewaterhouseCoopersInternational Limited(PwC International), eachof which is a separate legalentity

Introduction

In our view, the key factors that differentiatePwC among the world’s leading professionalservices organizations are the talent of ourpeople, the breadth of the PwC network andthe standards with which PwC firms comply.These standards cover important areas such asservice quality, governance arrangements,independence, risk management, people andculture, and brand and communications. PwCfirms agree to follow network standards andtheir compliance with these standards ismonitored regularly.

a. Legal structure of the network

In most parts of the world, the right to practiceaudit and accountancy is granted only tonational firms that are majority owned bylocally qualified professionals. PwC is a globalnetwork of separate member firms, owned andoperating locally in countries around theworld. PwC firms are members of PwCInternational and have the right to use thePricewaterhouseCoopers name.

As members of the PwC Network, PwC firmsshare knowledge, skills and resources. Thisenables PwC firms to work together to providehigh-quality services on a global scale tointernational and local clients, while still

taking advantage of being local businesses,knowledgeable about local laws, regulations,standards and practices.

PwC International is a private company,limited by guarantee, incorporated in Englandand Wales in which PwC firms are members.PwC International does not practiceaccountancy, or provide services to clients.Instead, it acts as a coordinating entity forPwC firms. PwC International works todevelop and implement policies and initiativesthat create a common and coordinatedapproach for PwC firms. PwC Internationalfocuses on key areas such as strategy, brand,and risk and quality.

PwC firms can use the PwC name and draw onthe resources and methodologies of the PwCNetwork. In return, member firms arerequired to comply with certain commonpolicies and the standards of the PwCNetwork.

Each member firm of PwC International is aseparate legal entity and does not act as anagent of PwC International, or any other PwCfirm. PwC International is not responsible orliable for the acts or omissions of any of itsmember firms, nor can it control the exerciseof their professional judgement or bind themin any way.

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2 The Network

No member firm is responsible, or liable forthe acts or omissions of any other memberfirm, nor can it control the exercise of anothermember firm’s professional judgement, orbind another member firm, or PwCInternational in any way.

b. Size of the network

Member firms of PwC International provideindustry-focused assurance, tax and advisoryservices to enhance value for their clients.Over 195,000 people in 157 countriesworldwide share their thinking, experienceand solutions to develop fresh perspectivesand practical advice.

c. Gouvernance structures of PwCInternational

The governance structures of PwCInternational are as follows:

o Global Board, who is responsible for thegovernance of PwC International and forthe oversight of the Network LeadershipTeam. The Board does not have an externalrole. Partners elect board members from allPwC member firms around the world everyfour years.

o Network Leadership team, which isresponsible for setting the overall strategy forthe PwC network and the standards to whichthe member firms agree to adhere.

o Strategy Council, which is made up of theleaders of the largest member firms of thenetwork, agrees changes to the strategicdirection of the network, in order to facilitatetheir consistent implementation.

o Network Executive Team, which reports to thenetwork Leadership Team, coordinates theservice lines and the key functional areas(such as Risk & Quality, Human Capital,Operations, Brand & Communication) acrossthe network.

d. Key features of the network

Every PwC firm is also responsible for its ownrisk and quality performance and, wherenecessary, for driving improvements. Every PwCfirm is also exclusively responsible for thedelivery of services to its clients.

To support transparency and consistency, eachPwC firm’s Territory Senior Partner signs anannual confirmation of compliance with certainstandards. These cover a range of areas includingindependence, ethics and business conduct,

Assurance, Advisory and Tax riskmanagement, governance, anti- bribery anddata protection and privacy.

These confirmations are reviewed by otherswho are independent from the PwC firm inquestion. Member firms are required todevelop an action plan to address specificmatters where they are not in compliance;such action plans are reviewed and executionof the plan is monitored.

There are some common principles andprocesses to guide PwC firms in applying thestandards. Major elements include:

- The way we do business

- Sustainable culture

- Policies and processes

- Quality reviews

i. The way we do business:

PwC firms undertake their businesses withinthe framework of applicable professionalstandards, laws, regulations and internalpolicies. These are supplemented by a PwCCode of Ethics and Business Conduct for theirpartners and staff.

The Network (continued)

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2 The Network

ii. Sustainable culture

To promote continuing business success, PwCfirms nurture a culture that supports andencourages PwC people to behaveappropriately and ethically, especially whenthey have to make tough decisions. PwCpeople have ready access to a wide array ofsupport networks within their respectivemember firms, both formal and informal, andtechnical specialists to help them reachappropriate solutions.

The foundation of PwC’s culture is objectivity,professional skepticism, cooperation betweenPwC firms and consultation.

iii. Policies and processes

Each PwC firm has its own policies, based onthe common standards and policies of the PwCNetwork. PwC firms also have access tocommon methodologies, technologies andsupporting materials for many services. Thesemethodologies, technologies and content aredesigned to help a member firm’s partners andstaff perform their work more consistently,and support their compliance with the wayPwC does business.

iv. Quality Reviews

Each PwC firm is responsible for monitoringthe effectiveness of its own quality controlsystems. This includes performing a self-assessment of its systems and procedures, andcarrying out, or arranging to be carried out onits behalf, an independent review. In addition,PwC International monitors member firms’compliance. This includes monitoring not onlywhether each PwC firm conducts objectivequality control reviews of all of its services, butalso includes consideration of a member firm’sprocesses to identify and respond tosignificant risks.

In accordance with applicable regulatoryrequirements, each firm may also be reviewedperiodically, in some cases annually, bynational and international regulators orprofessional bodies.

For Assurance work, there is a specific qualityreview program, based on relevantprofessional standards relating to qualitycontrols including International Standards onQuality Control 1: ‘Quality control for firmsthat perform audits and reviews of historicalfinancial information, and other assurance andrelated services engagements’ (ISQC 1)

and where applicable, of the US PublicCompany Accounting Oversight Board(PCAOB) Quality Controls Standards.

The overriding objective of the assurancequality review program is to assess for eachPwC firm that:

• Quality management systems areappropriately designed, are operatingeffectively and comply with applicablenetwork standards and policies

• Engagements selected for review wereperformed in accordance with professionalstandards and PwC Audit requirements,and

• Significant risks are identified andmanaged appropriately.

A member firm’s assurance quality reviewprogram is monitored, as is the status andeffectiveness of any quality improvementplans a PwC firm puts in place.


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2 The Network

e. Independence practices policy:

Objectivity is the hallmark of our profession,at the heart of our culture and fundamental toeverything we do. Independence underpinsobjectivity and has two elements:independence of mind and independence inappearance. PwC firms reinforce both of theseelements through a combination of setting theright tone from the top; independentconsultation on judgemental issues; detailedpolicy requirements including prescribedprocesses to safeguard independence; regulartraining; and careful observance ofindependence requirements.


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Governance Structure of PwC Tunisia

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3 Governance Structure of PwC Tunisia

The governance structureof PwC Tunisia is made upof two main elements: aTerritory Leadership Teamresponsible for directingand implementing thepolicies and strategies ofthe firm and for its day-to-day management and anOversight Board, whichoversees the executivemanagement.

a. Territory Leadership team

The Territory Leadership Team (“TLT”) is the executive group responsible for:

- Planning, development, management and control of the firm’s operations;

- Implementation and customization of the global strategies and policies;

- Implementation of the policies and the recommendations made by the firm’s OversightBoard.

The principal objective is therefore promoting maximization of the value, leadership andprestige of PwC in Tunisia and globally.

During the financial year ending 30 June 2017, the TLT was chaired by Abderrahmen Fendri(the TSP). The TSP was elected by the firm’s partners and he appoints the other TLT members,all of whom are partners in the firm. Each team member has responsibility and accountabilityfor a specific aspect of our business.

In conjunction with the other members of the LeadershipTeam, the TSP has the responsibility and authority toensure the proper integration of the firm’s units ofservice, with the objective of enhancing leadership, andhas joint management responsibility for support functionsin coordination with the appropriate global leaders.

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The members of the TLT, who served through the year ended 30 June 2017, are shown below:

Mabrouk Maalaoui

Tax Partner

Abderrahmen Fendri

Territory Senior Partner

Transaction ServicesPartner

Abir Matmti

Transaction Partner

Ahmed Belaifa

Assurance Leader

Risk ManagementPartner

Abdessatar Mabkout

Advisory Partner

Mohamed LassâdBorji

Assurance Partner

Moez Kammoun

Consulting PartnerNizar Yaiche

Consulting Partner

The TLT provides the necessary liaisonbetween the global structure and the firm.Each member works in coordination with therelevant global leaders and provides guidancefor the adequate application of global and localstrategies and policies. The TLT implementsall the mechanisms necessary for the adequateplanning of the operations of the firm(strategic plans and budgets) and the fair andequitable evaluation and compensation of thepartners, taking into consideration theunderlying objective of promoting the strengthof PwC as a whole (corporate strength) andintegration needs.

The TSP has, jointly with the LeadershipTeam, the responsibility and the authority forconducting the firm’s affairs within the limitsset by strategies and policies at global level. Inconjunction with the other members of theLeadership Team, the TSP has theresponsibility and authority to ensure theproper integration of the firm’s lines ofservice, with the objective of enhancingleadership, and has joint managementresponsibility for support functions incoordination with the appropriate globalleaders.

Governance Structure of PwC Tunisia(continued)

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b. Oversight Board:

The principal roles of the Oversight Board areto hold the firm’s TLT to account and torepresent the interests of partners, and as suchit is a vital part of the firm’s governancestructure.

The Oversight Board is made up of 4 founderpartners, who are elected for a term of threeyears by our partners.

Partners use the Oversight Board as a formalcommunication channel with the LeadershipTeam. This is achieved by holding regularmeetings with partners to get their views onthe firm’s overall strategy and any other issuesthat may be of concern.

PwC Tunisia has adopted detailed policies and related rules regarding business ethics andcompliance with all applicable professional standards. It strictly monitors compliance with allregulatory, professional and internal independence requirements related to financial interests,business and service relationships with clients and asks for annual confirmation of this from allrelevant staff.

The members of the Oversight Board, who served through the year ended 30 June 2017, areshown below:

- Abderrahmen Fednri : TSP

- Ahmed Belaifa

- Abdessatar Mabkout

- Mabrouk Maaloui

Governance Structure of PwC Tunisia(continued)

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Internal Control and Internal QualityControl System

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4 Internal Control and Internal Quality Control System

We are committed to deliveringthe highest quality professionalservices and audit qualityremains of paramountimportance to the firm and ourcontinued success in themarketplace. Quality comesfrom more than the systems andprocesses that are embedded inthe way we work to achievecompliance with standards andregulation, important thoughthese are. Ultimately, it dependson the culture of the firm, whichis based on the ‘tone at the top’,and our ability to recruit, trainand motivate intelligentprofessionals who take personalresponsibility to deliver high-quality work

Introduction

PwC Tunisia’s quality control systems for ourAssurance practice are based on InternationalStandards on Quality Control

1 – ‘Quality control for firms that performaudits and reviews of historical financialinformation and other assurance and relatedservices engagements’ (ISQC 1) – issued by theInternational Federation of Accountants(IFAC).

ISQC 1 applies to firms that perform audits offinancial statements, and provide otherassurance services where they relate toactivities that are reported in the publicdomain and are therefore in the publicinterest.

The objective of ISQC 1 is for the firm toestablish and maintain systems of qualitycontrol to provide it with reasonable assurancethat:

• The firm and its personnel followprofessional standards and applicable legaland regulatory requirements

• Reports issued by the firm, or byengagement leaders are appropriate in thecircumstances.

In addition, compliance with InternationalStandards on Auditing requires PwC Tunisiato have quality control systems over itsassurance practice. The policies andprocedures that form our internal qualitycontrol systems have been documented, andthere is a monitoring regime to enable the TLTto review the extent to which the policies andprocedures are operating effectively.

The policies and procedures are embedded aspart of the firm’s day-to-day activities.

Although this report is focused on ourAssurance practice, many of our systems,policies and procedures operate firmwideacross all parts of our business.

Our internal control systems are based on thesix elements of quality control set out in ISQC1, which are:

• Leadership Responsibilities for Qualitywithin the Firm

• Ethical Requirements

• Acceptance and Continuance of ClientRelationships and Specific Engagements

• Human Ressources

• Engagement Performance

• Monitoring

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In parts 1 to 6 below, we set out how ourinternal control and internal quality controlsystems incorporate each of the aboveelements.

Certain elements of the firm’s internal qualitycontrol systems are reviewed by the firm’sregulators. They are also subject to review aspart of the evaluation by PwC International ofPwC Tunisia’s compliance with the NetworkRisk Management Standards. Updates andchanges to the firm’s internal quality controlsystems, as well as points needingreinforcement, are communicated to partnersand staff via mandatory training and othertechnical communications. Details of thefirm’s internal quality control systems areavailable to partners and staff.

1. Leadership responsibilities forquality within the firm

a. Organizational structure

The TLT under Abderrahmen Fendri’schairmanship is responsible for the firm’sinternal control and internal quality controlsystems.

Day-to-day responsibility for implementingthis system and for monitoring risk and theeffectiveness of control is delegated to RiskManagement partner and the individual Linesof Service, where appropriate.

The firm’s leadership is committed to qualitywork and has established a culture ofupholding the values of integrity,independence, ethics and professionalcompetence.

Resources dedicated to establishing highstandards in quality, independence andprofessional ethics are in place. Quality hasbeen embedded throughout the firm and thedetailed policies endorsed by the TLTincluding ethical, human resources andengagement performance, are discussedbelow.

2. Relevant Ethical Requirement

We take good ethical behavior seriously andseek to embrace the spirit and not just theletter of relevant ethical requirements.

PwC Tunisia has an Ethics Committee led byAhmed Belaifa who is also the PwC Tunisia’sBusiness Conduct partner, a role defined bythe Ethics Standards. He is also a partnermember of the TLT and supported by a teamto help the firm apply comprehensive andconsistent independence policies, proceduresand tools.

All partners and staff undertake regularmandatory training so that they understandthe ethical and professional requirementsunder which we operate.

a. Professional Conduct :

The reputation and success of the firmdepends on the professionalism and integrityof every partner and member of staff. Partnersand staff comply with the standards developedby the PwC Network and PwC Tunisia, and thefirm monitors compliance with theseobligations.

Internal Control and Internal QualityControl System (continued)

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On joining the firm, all staff and partners areprovided with a copy of the PwC Tunisia Codeof Conduct. The Code of Conduct sets out whatwe stand for and is underpinned by thefollowing overarching principles:

• Acting professionally doing business withintegrity

• Upholding our and our clients’ reputations

• Treating people and the environment withrespect

• Acting in a socially responsible manner

• Working together and thinking about theway we work

• Considering the ethical dimensions of ouractions.

b. Independence

The firm has specific policies, procedures andpractices relating to independence, which areexplained in more detail in Section 6.

c. Confidentiality and informationsecurity

Confidentiality and information security arekey elements of our professionalresponsibilities. Misuse or loss of confidentialclient information or personal data may exposethe firm to legal proceedings, and it may alsoadversely impact our reputation. We havepolicies in place to ensure oversight, policy andstrategic direction on information securitymatters.

3. Acceptance and continuance ofclient relationships and specificengagements

We have rigorous client and engagementacceptance and continuance procedures tohelp protect the firm and its reputation.

a. Acceptance and continuancesystems

Within Assurance, we use an Acceptance andContinuance system (A&C) for all audit work.The A&C enables engagement teams, businessunit management and risk managementspecialists to determine whether the risksrelated to an existing or potential client orengagement are manageable,

and whether or not PwC Tunisia should beassociated with a particular client, itsmanagement and the services in question.

It also contains triggers that requireconsultation within business units and withthe Risk Management partner. This allows theright people to make the right decisions andalso enables the firm to put in place safeguardsto mitigate identified risks.

b. Withdrawal from an engagement

Policies and procedures are in place forcircumstances in which we determine that weshould, or are required to, withdraw from anengagement. These policies include the needfor appropriate consultations both within thefirm and with those charged with governanceof our clients, ensuring compliance with legaland professional obligations.

The policies and procedures also deal withcircumstances where we become aware ofinformation after accepting the engagementwhich, had we been aware of that informationearlier, would have led us to decline theengagement.


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c. Conflicts of interest

Before accepting a new client or engagement,we perform checks to identify relevantrelationships. Where conflicts of interest areidentified, we either decline to accept anengagement or we put in place arrangementsto make sure that potential conflicts of interestare appropriately managed.

4. Human Resources

Perhaps the most critical components ofquality are the skills and personal qualities ofour people. As a professional services firm,many of these skills and qualities are relevantto all our Lines of Service. As a consequence,our strategy for recruitment, engagement,development, diversity and remuneration isconsistent across the firm.

a. Recruitment

PwC Tunisia aims to recruit, train, develop andretain the best and the brightest staff thatshares in the firm’s strong sense ofresponsibility for delivering high qualityservices. We have always believed that the bestaudits are performed by bright and intelligentpeople. Accordingly, we maintain a strategy ofaccepting strong graduates into our auditbusiness and set a high academic threshold.

Candidates are considered according tomultiple criteria, including their academicachievement.

b. Performance evaluation

We continue to invest in equipping ourpartners and staff with the coaching andmanagement skills needed to give honestfeedback, to continually improve performance.We expect feedback to be provided regularly byall staff and partners. This feedback then formsa key element of our annual appraisal process.All partners and staff assess their performanceagainst their agreed objectives and againstgrade-related Global Core Competencies.

The appraisal process covers technicalcompetence and quality, and consideration isgiven not only to what an individual hasachieved, but also how they achieved it. Basedon this assessment, individuals are assigned aperformance rating that is benchmarked acrossthe firm and which influences their salary,bonus and progression within the firm.Unsatisfactory work results in reduced or noperformance- related remuneration andcorrective action being taken, as appropriate.

c. Career development

We develop our people through a combinationof on-the-job experience, coaching andtraining programs. This is supported byadditional development opportunities, such asinternal and external secondments,international assignments, membership ofprofessional committees and working groups.

Each member of staff has a coach managerassigned to them, who is responsible for theirperformance management, coaching and well-being. The coaches work with individuals tounderstand their strengths and developmentareas, and assess what opportunities areavailable to help them to acquire necessaryskills.

d. Promotion

Any promotion in the firm is based on anindividual’s performance, their skills and thebusiness

case. In the case of admission to partnership,the process is particularly thorough andinvolves the Line of Service leadership teams.All potential admissions to partnership areconsidered by the Partner AdmissionsCommittee, and are put to the full partnershipfor consideration.


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e. Remuneration

In determining remuneration for our staff, wecarefully balance several elements including:the economic climate; recognition of people’shard work including the quality of the workthey deliver; the performance of the firm; andinvestment for the future.

f. Assignment of engagement teams

Partners and staff are assigned to engagementteams, based on the individuals’ experience,competencies and grade. In addition, forcertain types of work we specify levels ofexperience and specific additional training tomake sure that the individuals are competentto undertake that type of work. In some areas,formal accreditation is needed, for exampleonly accredited individuals can lead orundertake certain types of work such as capitalmarket transactions and due diligence work.

g. Diversity

In all of the above areas of activity, weprioritise diversity. Having a diverse workforcewith a broad range of strengths helps us toensure we deliver quality work to our clients.We want all our people to flourish, whatevertheir background, and we specifically measureour performance in this area against ourgender profile.

Our audit work is documented using ourelectronic documentation tool, Aura. Aurasupports teams in applying our methodologyeffectively by creating transparency of thelinkage between risks and the work done toaddress those risks, as well as providingcomprehensive project managementcapabilities. The objective is that the quality ofour audits improves, as teams are able to focustheir efforts on areas of risk.

b. Comprehensive policies andprocedures:

The firm has policies and proceduresgoverning accounting and auditing practice.These are regularly updated to reflect newprofessional developments, changes in ouroperating environment and emerging externalissues, as well as the needs and concerns of thepractice. These policies cover bothprofessional and regulatory standards and alsoreflect the guidance that PwC Tunisia providesto its professionals on how best to implementthem. They are available in electronic files anddatabases, and are accessible to our peopleremotely at any time.

5. Engagement performance

We invest heavily in the effectiveness of ouraudits, in the skills of our people and in ourunderlying audit methodology, as well as inmaking the right amount of time and resourcesavailable.

a. Methodology and tools

Member firms of PwC International use acommon audit methodology and process (PwCAudit), supplemented by local regulatoryrequirements, for their audit engagements.This common methodology allows us toprovide high quality and consistent auditservices to multinational organizations andfacilitates sharing of good practice andmobility of partners and staff across the PwCNetwork. The PwC Tunisia audit approachadheres to International Standards onAuditing, and laws and regulations in Tunisia,and we continuously seek to improve themodel.

PwC Audit includes specific policies andprocedures about the audits of groupsincluding multi-locational and cross-bordergroups. Those policies and procedures includethe use of, and reliance on, other auditors,whether they are part of the PwC Network ornot, and the signing of group audit reports.


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c. Consultation and support

Consultation is a key element of qualitycontrol. The firm has policies setting out thecircumstances under which consultation ismandatory. The firm’s technical experts tracknew developments in relevant areas andprovide updates to the appropriateprofessional staff.

Our consultative culture also means that ourengagement teams regularly consult with eachother on an informal basis, as well as expertsand others, often in situations whereconsultation is not formally required.

Within Assurance, we use a consultationdatabase that has been specifically designed toaid the enquiry and consultation process. Italso makes sure documentation ofconsultations with the Assurance Risk andQuality group is in accordance withprofessional standards.

d. Supervision and review

The engagement leader and engagementmanager supervise the audit, review the workdone, coach the team and maintain auditquality.

Our audit software, Aura, is designed to helpaudit team members track the progress of theengagement and therefore make sure that allwork has been completed, that work isreviewed by the relevant individuals includingthe engagement leader and, where relevant,the Quality Review Partner, and that allmatters arising have been appropriatelyaddressed.

The engagement leader is expected to:

• Lead the performance of the audit and itsdocumentation by being proactively andsufficiently involved throughout the auditincluding being satisfied that risks havebeen assessed and responded toappropriately

• Drive a cultural mindset that strives forcontinuous quality improvement,challenges engagement team members tothink, analyze, question and be rigorous intheir approach, and embody theexperiences of our clients and people in howthe team delivers the audit and appliesprofessional skepticism

• Foster an integrated coaching culture anddemonstrate a willingness to learn and tocoach others

• Be responsible for the engagement teamundertaking appropriate consultation ondifficult or contentious matters, initiatingthose consultations where necessary

• Have an ongoing involvement in assessingthe progress of the audit, and in making keyjudgements

• Be satisfied that the review, supervision andquality control procedures in place areadequate and effective

• Have an overall responsibility for reviewingand assessing the quality of the work done,its proper and timely documentation andthe conclusions reached.

The engagement manager supports theengagement leader by:

• Setting an example in the performance ofthe audit and its documentation by beinginvolved throughout the audit includingidentifying the risks and being satisfied thatthey are responded to appropriately

• Striving for continuous qualityimprovement, challenging engagementteam members and applying rigor to theaudit process


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• Fostering an integrated coaching cultureand demonstrating a willingness to learnand coach others

• Together with the engagement leader,putting in place arrangements for timelyreviews of audit work and documentation,and, taking into account the nature, extentand level of reviews already performed byother members of the team, satisfyinghimself or herself that the work performedand documentation is consistent with theunderstanding of the engagement

• Reviewing work done and the record of theaudit including considering the quality ofthe audit process and the results of the workand the documentation of conclusions.

In addition to reviews by the engagementleader and engagement manager, all staff areexpected to critically self-review their ownwork to make sure that it meets the relevantrequirements.

e. Engagement quality control review

We appoint a Quality Review Partner (QRP) toconduct engagement quality control reviews ofthe audits of listed clients, other public interestentities and clients identified as high risk.

QRPs are experienced partners who areindependent of the core engagement team;they receive training when appointed as aQRP. QRPs are appointed to an engagement,based on their experience and expertise.

The QRP is responsible for reviewing keyaspects of the audit including independence,significant risks and their responses,judgements, uncorrected misstatements,documentation of work done in the areasreviewed, the financial statements,communication with those charged withgovernance and the appropriateness of theaudit report to be issued. QRPs are involvedthroughout the audit process so that theirinput is timely.

The QRP will seek to challenge the audit teamin the judgements they have made and workdone. Their review is completed and anymatters raised are resolved to the QRP’ssatisfaction in advance of the audit report date.

f. Engagement Documentation

At the end of an engagement, teams arerequired to assemble the hard copy paper fileand then archive both this and the electronicfile within set periods laid down byprofessional standards and law.

In the case of the electronic audit file,automated processes exist to make sure thatthe file is archived on time and the act ofarchiving prevents any further amendmentsbeing made to the file. The hard copy file isthen retained in a secure access controlledfiling system.

Both the electronic and hard copy paper filesare accessible only by members of theengagement team until they are destroyed. Allengagement files are destroyed after periodsspecified by law or professional standards.

g. Audit reporting

We are acutely aware that the effectiveness ofour work as auditors is directly linked to theeffectiveness of our reporting, whether to auditcommittees and boards of directors, or in therole we play in external reporting

i. Reporting to audit committees

When reporting to audit committees, andthose charged with governance in otherorganizations where no audit committee exists,we place particular emphasis oncommunicating our audit scope and approach,together with our assessment of audit risk.


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During the course of the audit wecommunicate any threats to auditor objectivityincluding independence, the significant risksand judgements that impact the reportedfinancial performance and position, and themanner in which the information is presentedin the annual report. In part, this presentationof significant judgements includes highlightingto the audit committee the judgements thathave been made by management in preparingthe financial statements that we believe areimportant to an understanding of theperformance being presented.

It is important as auditors that we recognizethat the nature of accounting and thejudgements that are applied mean that there isoften not a precise answer.

It is also our role to inform the Board whetherwe can conclude that what is reportedexternally is reasonable within establishednorms of materiality including consideringboth qualitative and quantitative aspects ofaccounting and reporting.

ii. External reporting

The form and content of our audit reports forTunisian entities are laid down by professionalstandards in force in Tunisia.

We are conscious that our reports should beclear and unambiguous. We also believe thatthey should be informative and valuable inproviding additional insights from our audit.

Engagement leaders only conclude on thereasonableness of the financial statements andsign an audit opinion following appropriatereview of the work performed by the auditteam, resolution of issues identified,clarification of any uncertainties and anassessment of uncorrected misstatements,both quantitative and qualitative, identified inrespect of the financial statements.Consultation procedures are in place where amodified opinion or an emphasis of matter isproposed. The consultation process assists inconveying matters raised clearly andunambiguously.

6. Monitoring

Monitoring of our internal quality controlsystems comprises internal and externalmonitoring. External monitoring is undertakenby the firm’s regulators and is dealt with inSection 5.

Quality monitoring is an integral part of thefirm’s continuous improvement program.

The firm constantly seeks to improve policies,procedures and the consistency of the qualityof our work. Instances of failure to meetdefined performance standards are treatedseriously and the engagement leaderresponsible will be counselled to improveperformance. In addition, under the firm’saccountability framework, an engagementleader’s remuneration can be impacted byquality failings.

Details of the Assurance program are set outbelow.

a. Global Assurance Quality ReviewProgram

The PwC Network has established a reviewprogram for all PwC Assurance practices. Thisincludes a Quality Management Review(QMR), which tests whether our qualitymanagement systems are appropriatelydesigned, operating effectively and complieswith our Network standards, and anEngagement Compliance Review (ECR)program to assess whether engagements areperformed in accordance with relevantstandards. The results of the QMR and ECRare included in the Member Firm Report,issued on each Assurance practice.


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i. Quality ManagementReview

A full QMR is performed at leastevery three years with an updatebeing performed in the interveningyears. The updates monitor progresson remediation of any control issuesraised in the last full review andassess the impact of any newdevelopments on the internalquality control systems. The QMR isled and resourced from other PwCNetwork firms.

ii. Engagement ComplianceReviews

The key features of the annual ECRprogram are as follows:

• A review of completed auditengagements of individuals in thefirm who are authorized to signaudit reports (known asResponsible Individuals)

• An audit engagement of eachengagement leader is reviewed atleast once every three years asrequired by Audit Regulations,

although the frequency increases where wetarget higher profile clients.

• A review of completed non-auditengagements

• Engagement leaders who perform non-audit work are reviewed at least onceevery five years but depending on thenature of the non-audit work performed,the engagement leader may be reviewedmore frequently

• Engagement reviews are led byexperienced partners, supported by teamsof directors and managers who are allindependent of the office, business unitand engagement leader being reviewed

• Follow-up reviews take place ifdeficiencies have been identified

• Adverse findings are taken intoconsideration in determining the rewardand promotion of engagement leaders

• Results are reported to the TLT and PwCInternational


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Internal Control and Internal QualityControl System (Key messages)

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5 Internal Control and Internal Quality Control System (Keymessages)

The reputation and success of the firmdepends on the professionalism and

integrity of every partner and memberof staff

We have rigorous client andengagement acceptance and

continuance procedures to helpprotect the firm and its reputation

The firm’s leadership is committed to quality work and hasestablished a culture of upholding the values of integrity,,

independence, ethics and professional competence

Our audit software, Aura, drivesaudit quality and enables theexecution of a single, globally

consistent audit approach

Quality monitoring is an integral part ofthe firm’s continuous improvement

program. The firm constantly seeks toimprove policies procedures and the

consistency and quality of your work

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ExternalLeadership

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6 External Leadership

The firm is registered and authorized to undertake statutory audit work by theTunisian Committee of Certified Public Accountants.

Each year, as part of its monitoring responsibilities, the Tunisian Committee ofCertified Public Accountants may conduct reviews of the working papers ofthose who perform an external control over the Tunisian companies.

Up to the date of this report, the Tunisian Committee of Certified PublicAccountants has not set up an external inspection program over statutoryauditors.

We are committed toworking

constructively with,and take seriously,

all thefindings identified by

the firm’sregulators in

relation to thequality of thefirm’s audit work.

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Independence Policies and Practices

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7 Independence Policies and Practices

a. Organisation

PwC Tunisia has a designated partnerAbderrahmen Fendri, (known as the “PartnerResponsible for Independence” or “PRI”) withappropriate seniority and standing, who isresponsible for providing appropriate supportand processes such that partners and staff areknowledgeable about independence mattersand that they take the actions required of themby the firm’s independence policies andsupporting guidance. A small team ofIndependence specialists supports the partner.

b. Policies and guidance

The PwC Network Independence Policy, whichis based on the International Ethics StandardsBoard for Accountants (‘IESBA’) Code ofEthics for Professional Accountants, containsminimum standards with which PwC memberfirms have agreed to comply, includingprocesses that are to be followed to maintainindependence from clients, when necessary.

The independence requirements of the UnitedStates Securities and Exchange Commissionand those of the Public Accounting OversightBoard of the United States are, in certaininstances, more restrictive than the firm’spolicy.

Given the reach of these requirements andtheir impact on PwC Network Firms, the policyidentifies key areas where these requirementsare more restrictive.

PwC Tunisia supplements the PwC NetworkIndependence Policy as required by theTunisian professional standards and of theirregulators.

The Firm’s independence policy covers, amongothers, the following areas:

• Personal and firm independence, includingpolicies and guidance on the holding offinancial interests and other financialarrangements, e.g. bank accounts and loansby partners, staff, the firm and its pensionschemes;

• Non-audit services and fee arrangements.The policy is supported by Statements ofPermitted Services (‘SOPS’), which providepractical guidance on the application of thepolicy in respect of non-audit services toassurance clients; and

• Business relationships, including policiesand guidance on joint businessrelationships (such as joint ventures andjoint marketing) and on purchasing ofgoods and services acquired in the normalcourse of business.

c. Training and confirmations

PwC Tunisia provides all partners and staffwith annual or on-going training inindependence matters. Additionally, PwCTunisia’s independence specialists and riskand quality teams deliver face-to-face trainingto members of the practice on an as-neededbasis.

PwC Tunisia requires all partners and staff,upon joining and at least annually thereafter,to confirm their compliance with all aspects ofPwC Tunisia independence policy, includingtheir own personal independence. In additionall partners confirm that all non-audit servicesand business relationships for which they areresponsible comply with policy and that PwCTunisia processes have been followed inaccepting these engagements andrelationships. These confirmations serve twoprimary purposes: to identify any threats toindependence that may have arisen; and toprovide a periodic reminder of PwC Tunisia’sindependence policies and procedures. Theseannual confirmations are supplemented byperiodic and ad-hoc engagement levelconfirmations for PwC Tunisia’s public clients.

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d. Independence Systems

As a member of the PwC Network, the Firmhas access to a number of global systems thatassist PwC member firms and their personnelin complying with independence policies andprocedures.

These systems include:

• The Central Entity Service (“CES”), whichcontains information about corporateentities including public interest auditclients and SEC restricted clients and theirrelated securities. CES assists indetermining the independence status ofclients of the firm before entering into anew non-audit engagement or businessrelationship. This system also feeds theIndependence Checkpoint system;

• The Checkpoint that facilitates the pre-clearance of publicly traded securities by allpartners, directors and practice managersbefore acquisition and records theirsubsequent purchases and disposals. Wherea member firm wins a new audit client, thissystem automatically informs those holdingsecurities in this client of the requirementto sell the security where required; and

• Authorisation for Services: (“AFS”) which isa global system that facilitatescommunication between a non-auditservices engagement leader and the auditengagement leader, documenting thepotential independence threats of theservice and proposed safeguards, and actsas a record of the audit partner’s conclusionon the acceptability of the service.

• PwC Tunisia also has a number of localsystems, which include, for example, arotation tracking system that monitorscompliance with our Firm’s audit rotationpolicies for engagement leaders and keypartners.

e. Internal reviews of independenceprocedures and practices

Our independence procedures and practicesare subject to internal review on an on-goingbasis. This is achieved through a monitoringand testing program, which includes thefollowing:

• Quality control reviews of engagements toconfirm compliance with risk managementprocesses, including independence;

• Personal independence compliance testingof a random selection of partners, directorsand managers;

• Compliance testing of independencecontrols and processes; and

• Annual assessment of our Firm’s adherencewith the PwC Network’s independence riskmanagement standard.

• In addition, policies and guidance arereviewed and revised when changes arisesuch as updates to laws and regulations,when PwC Network policies and guidancechange or as a result of the above reviewsand of our monitoring and testing program;

• The results of our Firm’s monitoring arereported to our TLT to provide assurancethat our Firm’s policies and processes arebeing followed. The investigations of anyidentified violations of policies also serve toassess the need for improvements in ourFirm’s systems and processes and foradditional guidance and training. Aninternal review of the effectiveness of ourindependence processes is conductedannually

Independence Policies and Practices(continued)

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f. Disciplinary policy

PwC member firms are required to havedisciplinary mechanisms to promotecompliance with independence policies andprocesses and to report and address anyviolations of independence requirements. Apartner or staff member may be subject to afine or other disciplinary action for a violationof independence policy.

Independence Policies and Practices(continued)

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Our People

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8 Our People

Our Firm has created and maintains up-to-date comprehensive onlinereference databases and materials, which are accessible by all assurancepractice partners and staff. These cover audit policy, procedures andmethodology, and include a library of relevant Tunisian andinternational accounting, auditing and ethical standards. To supportand keep staff and partners’ knowledge up to date, partners and staffreceive regular communications on technical and regulatory topics asthey arise through internal technical alerts and newsletters. Partners,managers and staff participate in at least four update technicalmeetings a year covering several aspects of technical and regulatorytopics. A Technical Team provides consultation support on all aspectsof auditing, accounting and regulatory requirements. We have subjectmatter experts in specialist industries.

Our Firm’s internal training curriculum provides a broad range oftechnical solutions as well as business and personal skills program.There are also specialized training program available for those withclients in specialist industries.

We carefully assess the training needs of our people tobe certain of a close match with our business needs andoptimum cost efficiency. As a result, most of ourtraining solutions concentrate on reinforcing thetechnical excellence of our people (accountingstandards, risk management, industry and auditmethodology for example).

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FinancialInformation

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9 Financial Information

At PwC Tunisia our wide range and size of clients come from a broad spectrum of activities, the financial sector, including banking, assetmanagement and insurance, to industrial and commercial activities, from large multinationals to small family-run businesses and, of course, thepublic and institutional sectors.

For the financial year ended 30 June 2017, PwC Tunisia revenues are about Eur 5 millions. Our gross revenues for audit services representapproximately 50% of our firm’s total gross revenues. Tax, advisory and other assurance non-audit services represent approximately 16%, 31%and 4% of our firm’s total gross revenues, respectively.

A list of the public interest entities defined as those incorporated outside of the EU that have transferable securities listed on a EU regulatedmarket for which we carried out a statutory audit during the year ended 30 June 2017 can be found in section 10. In the aggregate, these clientsrepresented approximately 25% of our firm’s total revenues from audit services for the year ended 30 June 2017.

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Remuneration ofPartners

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10 Remuneration of Partners

At PwC Tunisia, our partners are remunerated solely out of the profits of our firm. The final allocation and distribution of profit to individualpartners is made once their performance has been assessed and the annual financial statements have been approved.

Each Partner’s remuneration comprises three interrelated profit-dependent components:

Fixed Responsibility income – reflecting the Partner’s sustained contribution and responsibilities;

Variable Performance income – reflecting how a Partner and their team(s) has performed; and

Seniority income – reflecting the number of years of the person as an active partner in the firm.

Each partner’s performance income is determined by assessing achievements against an individually tailored balanced scorecard of objectivesbased on the partner’s role and responsibilities.

Under no circumstances are partners rewarded for selling non-audit services to audit clients.

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Public InterestEntities

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11 Public Interest Entities

During the period covered by this report PwC Tunisia has signed the audit opinion for the following Public Interest Companies clients:

- BANQUE SAHELO-SAHARIENNE POUR L'INVESTISSEMENT ET LE COMMERCE SA (BSIC)- BANQUE DE TUNISIE ET DES EMIRATS S.A.- Cellcom SA- Citibank Tunisia- COMPAGNIE MEDITERRANIENNE DASSURANCES ET DE REASSURANCE- Société des Articles hygiéniques- Société Frigorifique et Brasserie de Tunis SFBT- Société moderne des céramiques- SOTIPAPIER- Carthage Cement S.A- Attijari Bank- LAND’OR S.A- Banque Internationale Arabe de Tunisie- Banque Tuniso Kowétienne de Développement- Société Automobile Réseau Tunisien et Service ARTES- L’Accumulateur Tunisien ASSAD- UNIMED S.A- Arab International Lease- ENDA Inter-Arab- FINACORP- Banque Maghrebine d’Investissement et de Commerce Extérieur (BMICE)- Microcred

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2017 PwC Tunisia Transparency reportAs you will see from this report, we invest significant time and...

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Transcript of 2017 PwC Tunisia Transparency reportAs you will see from this report, we invest significant time and...