Transparency Report 2016 - ey.com · Transparency Report 201 6: EY Lao 3 Message from the Country...

TransparencyReport 2016

EY Lao

Transparency Report 2016: EY Lao 2

ContentsMessage from the Country Managing Partner .................................................................................................................. 3

About us ...................................................................................................................................................................... 5

Legal structure, ownership and governance ................................................................................................................. 5

Network arrangements .............................................................................................................................................. 5

Commitment to quality .................................................................................................................................................. 8

Infrastructure supporting quality................................................................................................................................. 8

Instilled professional values ........................................................................................................................................ 9

Internal quality control system .................................................................................................................................. 10

Client acceptance and continuance ............................................................................................................................ 11

Performance of audits ............................................................................................................................................. 11

Review and consultation .......................................................................................................................................... 13

Audit partner rotation .............................................................................................................................................. 14

Audit quality reviews ............................................................................................................................................... 14

External quality assurance review ............................................................................................................................. 14

Compliance with legal requirements .......................................................................................................................... 16

Independence practices ............................................................................................................................................... 17

Continuing education of audit professionals .................................................................................................................. 19

Revenue and remuneration .......................................................................................................................................... 20

Financial information ............................................................................................................................................... 20

Partner remuneration .............................................................................................................................................. 20

More information about EY can be found at ey.com.


Message from the Country Managing Partner

Welcome to our first Transparency Report of Ernst & Young Lao Co.,Ltd (EY Lao). We appreciate that our stakeholders want tounderstand how we advance audit quality, manage risk and maintain our independence as auditors. Regular dialogue is importantto us, and this report is one of the ways in which we advise our stakeholders on what we are doing in each of these areas.

Executing high-quality audits continues to be our top priority and is at the heart of our commitment to serve the public interest.It enables us to grow the global EY network successfully and responsibly, while achieving our purpose of building a better workingworld. Auditors play a vital role in the functioning of capital markets by promoting transparency and supporting investorconfidence. Companies, regulators and other stakeholders count on us to deliver excellence in every engagement.

We are focused on investing in tools to improve what we do, creating the highest-performing teams, and building trust andconfidence in the audits we perform.

EY Lao’s reputation is based on and grounded in providing high-quality professional audit services objectively and ethically toevery company we audit.

We continue to embrace the transparency objectives of the Law on independent Audit by National Assembly of Lao People'sDemocratic Republic (Law on independent Audit of Lao PDR), which require Lao statutory auditors of public interest entities(PIEs) to publish annual transparency reports.

The 2016 EY Lao Transparency Report complies with the directive and Law on Independent Audit of Lao PDR, and covers thefiscal year ended 31 December 2016. In this report, you can learn more about our internal quality control system: how we instillprofessional values, how we perform an audit, our review and consultation processes, our approach to audit quality reviews, andour independence practices.

EY Lao is focused on enhancing audit quality and upholding our independence, informed by several matters including externaland internal inspection results. Continuous improvement of audit quality requires us to challenge approaches to audit execution,and we focus on this by evaluating all inspection findings and taking responsive actions.

At EY Lao, we believe that the investments we make in recruiting and developing our professionals are critical to our success andstrengthening our service offerings to clients. The feedback from our people through the Global People Survey is an importantmeasure of how well we are doing, including how we engage with our people.

Regular dialogue with our stakeholders remains a priority for us. During the past year, we have spoken to many of our people andour stakeholders about the investments we are making as part of our new strategy. We are very excited about our renewed senseof purpose.

We encourage all our stakeholders — including investors, audit committee members, companies and regulators — to continue toengage with us on our strategy as well as any of the matters covered in this report.

Tran Dinh Cuong

Country Managing Partner

Ernst & Young Lao Co.,Ltd


EY’s purpose: building a better working worldEY is committed to doing its part in building a better working world.

The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the worldover. We develop outstanding leaders who team to deliver on our promises to stakeholders. In so doing, we play a critical rolein building a better working world for our people, our clients and our communities.


About usLegal structure, ownership andgovernanceErnst & Young Lao Co.,Ltd is a limited liability companyorganized in Lao People's Democratic Republic (Lao PDR)and is a member firm of Ernst & Young Global Limited, a UKcompany limited by guarantee (EYG). In this report, we referto ourselves as“EY Lao,” “we,” “us” or “our.” EY refers collectively to theglobal organization of the member firms of EYG.

EYG member firms are grouped into four geographic Areas:Americas; Asia-Pacific; Europe, Middle East, India andAfrica (EMEIA); and Japan. The Areas comprise a number ofRegions, which consist of member firms or sections of thosefirms. Within the Asia-Pacific Area, there are five Regions.EY Lao is part of the Asean Region.

EY Lao is part of the Asia-Pacific Area, which comprisesmember firms in 22 countries and is a member of Ernst &Young Asia-Pacific Limited (“Asia-Pacific Limited”).

Asia-Pacific Limited, a Hong Kong company limited byguarantee, is the principal coordinating entity for the EYGmember firms in the Asia-Pacific Area. Asia-Pacific Limitedfacilitates the coordination of these firms and cooperationbetween them, but it does not control them. Asia-PacificLimited is a member firm of EYG, has no financialoperations and does not provide any professional services.

Organizational structure of EY Lao is as follows:

- Legal name: Ernst & Young Lao Co., Ltd- Head Office: 6th floor, KOLAO TOWER I, 23 Singha

Road, Nongbone Village, Saysettha District, VientianeCapital, Lao P.D.R.

- Phone Number: +856 21 455 077- Ownership type: Limited liability company- Legal representative: Mr. Tran Dinh Cuong- Board of Management:

In accordance with legal structure

Name Position Legal entityposition

Tran DinhCuong

Managing Partner Director

Trinh HoangAnh

Partner DeputyDirector

Supporting partners from network

Name PositionVu Thi Thu Huong PartnerNguyen Thuy Duong PartnerNguyen Thai Thanh PartnerLe Duc Truong Partner

Network arrangementsEY is a global leader in assurance, tax, transaction andadvisory services. Worldwide, 250,000 people in memberfirms in more than 150 countries share a commitment tobuilding a better working world, united by shared values andan unwavering commitment to quality, integrity andprofessional skepticism. In today’s global market, theintegrated EY approach is particularly important in thedelivery of high-quality multinational audits, which can spanmultiple jurisdictions.

This integrated approach enables EY to develop and drawupon the range and depth of expertise required to deliversuch complex audits.

EYG coordinates the member firms and promotescooperation among them. EYG does not provide services,but its objectives include the promotion of exceptional high-quality client service by member firms worldwide.

Each member firm is a legally distinct entity. Theirobligations and responsibilities as members of EYG aregoverned by the regulations of EYG and various otheragreements.

The structure and principal bodies of the globalorganization during the year ended 30 June 2017 aredescribed below. They reflect the principle that EY, as aglobal organization, has a common shared strategy.

The Executive includes the Global Executive (GE), itscommittees and teams, and the leadership of the fourAreas. This streamlined structure allows EY to enhance itsglobal scale and the delivery of consistent exceptional clientservice worldwide, with the Executive responsible forcoordinating a global approach to strategy, quality, riskmanagement business planning and priorities.

At the same time, the network also operates on a Regionallevel. This operating model allows for greater stakeholderfocus in the 28 Regions, permitting member firms to buildstronger relationships with clients and others in eachcountry, and be more responsive to local needs.


Global Governance CouncilThe Global Governance Council (GGC) is the main oversightbody of EYG. It comprises one or more representatives fromeach Region, other member firm partners as at-largerepresentatives and up to six independent non-executives(INEs). The Regional representatives, who otherwise do nothold senior management roles, are elected by their RPFs fora three-year term, with provision for one successivereappointment. The GGC advises EYG on policies, strategiesand the public interest aspects of its decision-making. Theapproval of the GGC is required for a number of significantmatters that could affect EY.

Independent Non-ExecutivesUp to six Independent Non-Executives (INEs) are appointedfrom outside EY. The INEs are senior leaders from both thepublic and private sectors, and reflect diverse geographicand professional backgrounds. They bring to the globalorganization, and the GGC, the significant benefit of theirvaried perspectives and depth of knowledge. The INEs alsoform a majority of the Public Interest Sub-Committee of theGGC, which addresses public interest matters, includingstakeholder dialogue. The INEs are nominated by adedicated committee.

Global ExecutiveThe Global Executive (GE) brings together EY’s leadershipfunctions, services and geographies. It is chaired by theChairman and CEO of EYG, and includes its Global ManagingPartners of Client Service and Business Enablement; theArea Managing Partners; the global functional leadershipfor Talent and Finance; the leaders of the global servicelines — Assurance, Advisory, Tax and Transaction AdvisoryServices; the Global Leader for Public Policy; and one EYGmember firm partner on rotation.

The GE also includes the Chair of the Global AccountsCommittee and the Chair of the Emerging MarketsCommittee, as well as a representative from the EmergingMarkets practices.

The GE and the GGC approve nominations for the Chairmanand CEO of EYG, and ratify appointments of the GlobalManaging Partners. The GE also approves appointments ofGlobal Vice Chairs. The GGC ratifies the appointments ofany Global Vice Chair who serves as a member of the GE.

The GE’s responsibilities include the promotion of globalobjectives and the development, approval, and, whererelevant, implementation of:

• Global strategies and plans• Common standards, methodologies and policies to be

promoted within member firms• People initiatives, including criteria and processes for

admission, evaluation, development, reward andretirement of partners

• Quality improvement and protection programs• Proposals regarding regulatory matters and

public policy• Policies and guidance relating to member firms’ service

of international clients, business development, marketsand branding

• EY’s development funds and investment priorities• EYG’s annual financial reports and budgets• GGC recommendations

The GE also has the power to mediate and adjudicatedisputes between member firms.

Americas EMEIA Asia-Pacific Japan

Regions 10 Regions 12 Regions 5 Regions 1

Countries 31 Countries 98 Countries 22 Countries 1


GE committeesEstablished by the GE and bringing together representativesfrom the four Areas, the GE committees are responsible formaking recommendations to the GE. In addition to theGlobal Audit Committee, there are committees for GlobalMarkets and Investments, Global Accounts, EmergingMarkets, Talent, Risk Management, Assurance, Advisory,Tax, and Transaction Advisory Services.

Global Practice GroupThis group brings together the members of the GE, GEcommittees and Regional leaders. The Global PracticeGroup seeks to promote a common understanding of EY’sstrategic objectives and consistency of execution across theorganization.

EYG member firmsUnder the regulations of EYG, member firms committhemselves to pursue EY’s objectives, such as the provisionof high-quality service worldwide. To that end, the memberfirms undertake the implementation of global strategies andplans, and to maintain the prescribed scope of servicecapability. They are required to comply with commonstandards, methodologies and policies, including thoseregarding audit methodology, quality and risk management,independence, knowledge sharing, human resources, andtechnology.

Above all, EYG member firms commit to conducting theirprofessional practices in accordance with applicableprofessional and ethical standards, and all applicablerequirements of law. This commitment to integrity anddoing the right thing is underpinned by the EY Global Codeof Conduct and EY values (see page 10).

Besides adopting the regulations of EYG, member firmsenter into several other agreements covering aspects oftheir membership in the EY organization, such as the rightand obligation to use the EY name, and the sharing ofknowledge.

Member firms are subject to reviews that evaluate theiradherence to EYG requirements and policies governingissues such as independence, quality and risk management,audit methodology, and human resources. Member firmsunable to meet the quality commitments and other EYGmembership requirements may be subject to separationfrom the EY organization.


Commitment to qualityInfrastructure supportingqualityQuality in our service linesVision 2020, which sets out EY’s purpose, ambition andstrategy, calls for EYG member firms to provide exceptionalclient service worldwide. This is supported by anunwavering commitment to quality and service that isprofessionally and globally consistent, and means servicethat is based on objectivity, professional skepticism, andadherence to EY and professional standards.

EYG member firms and their service lines are accountablefor delivering quality engagements. EY service linesmanage the overall process for quality reviews of completedengagements and input for the quality of in-processengagements, which helps achieve compliance withprofessional standards and EY policies.

Vision 2020 has reinforced the ownership of qualityby the service lines, including audit. It has alsoresulted in increased clarity around the role of riskmanagement in policies and practices that support andimprove quality audit.

The Global Vice Chair of Assurance coordinates memberfirms’ compliance with EY policies and procedures forassurance services.

Professional PracticeThe Global Vice Chair of Professional Practice, referred toas the Global Professional Practice Director (PPD), isoverseen by the Global Vice Chair of Assurance and worksto establish global audit quality control policies andprocedures. Each of the Area PPDs is overseen by theGlobal PPD and the related Area Assurance Leader. Thishelps provide greater assurance as to the objectivity ofaudit quality and consultation processes.

The Global PPD also leads and oversees the GlobalProfessional Practice group. This is a global network oftechnical subject matter specialists in accounting andauditing standards, who consult on accounting, auditingand financial reporting matters, and perform variouspractice monitoring and risk management activities.

The Global PPD oversees development of the EY GlobalAudit Methodology (EY GAM) and related technologies sothat they are consistent with relevant professionalstandards and regulatory requirements. The Global

Professional Practice group also oversees the developmentof the guidance, training and monitoring programs andprocesses used by member firm professionals to executeaudits consistently and effectively. The Global, Area andRegion PPDs, together with other professionals who workwith them in each member firm, are knowledgeable aboutEY people, clients and processes, and they are readilyaccessible for consultation with audit engagement teams.

Additional resources often augment the Global ProfessionalPractice group, including networks of professionalsfocused on:

• Internal-control reporting and related aspects of the EYaudit methodology

• Accounting, auditing and risk issues for specificindustries and sectors

• Event-specific issues involving areas of civil andpolitical unrest; or sovereign debt and relatedaccounting, auditing, reporting and disclosureimplications

• General engagement issues and how to work effectivelywith audit committees

Risk managementResponsibility for the delivery of high-quality service andownership of the risks associated with quality is placed withthe member firms. Among other things, the Global RiskManagement Leader helps oversee the management ofthese risks by the member firms, as well as other risksacross the organization as part of the broader EnterpriseRisk Management framework.

Member firm partners are appointed to lead riskmanagement initiatives in both the service lines andmember firms, supported by other staff and professionals.The Global Risk Management Leader is responsible forestablishing globally consistent risk management executionpriorities and enterprise-wide risk management. Thesepriorities cascade to member firms, and their execution ismonitored through an Enterprise Risk Managementprogram.


Global confidentiality policyProtecting confidential information is ingrained in theeveryday activities of EYG member firms. Respect forintellectual capital and all other sensitive and restrictedinformation is required by the Global Code of Conduct,which provides a clear set of principles to guide thebehaviors expected of all EY people. The GlobalConfidentiality Policy further details this approach toprotecting information and reflects the ever-increasing useof restricted data. This policy provides added clarity for EYpeople and forms the fundamental element of broaderguidance that includes key policies on conflicts of interest,personal data privacy and records retention. Otherguidance includes:

• Social media guidance• Information-handling requirements• Knowledge-sharing protocols

Components of the audit quality control programIn the following sections, we describe the principalcomponents of the EY Lao audit quality control program:

• Instilled professional values• Internal quality control system• Client acceptance and continuance• Performance of audits• Review and consultation• Audit partner rotation• Audit quality reviews• External quality-assurance reviews• Compliance with legal requirements

Instilled professional valuesSustainable Audit QualityQuality is the foundation for exceptional client service. It iswhat we pride ourselves on. It is integral to our work andcentral to our responsibility to provide confidence to thecapital markets. Delivering quality is at the heart of all wedo and supports our purpose of building a better workingworld for our people, our clients and our communities. Thisis reflected in the Sustainable Audit Quality (SAQ) program,which is the highest priority for our Assurance practice.

Each member firm that makes up our global structure iscommitted to providing high-quality audits. In 2015, welaunched the SAQ initiative throughout our Assurancepractices. SAQ establishes a governance structure and isfocused on continuously improving our audit process.

We use the word “sustainable” in SAQ to demonstrate thatthis is not a one-off short-term initiative, but an ongoingprocess of improvement. EY has had a common auditmethodology for some time; now we have a commonlanguage and processes regarding audit quality.

There are six components to SAQ: tone at the top,strengthening people capabilities, simplification, audittechnology and digital, enablement and quality support,

and accountability. SAQ is implemented by each memberfirm, and is coordinated and overseen globally.

We constantly reinforce the importance of the sixcomponents, and discuss them with every RegionalAssurance leader and every partner. Audit quality and thekey elements of SAQ are something every senior manager,manager and team member must understand and becommitted to implementing locally. SAQ is essential to allour goals and ambitions.

We have made significant progress through SAQ. EY’sinternal and external inspection findings globally areshowing improvement, and we are producing greaterconsistency in execution.

We have deployed world-class tools that enhance thequality and value of our audits. Our ability to deliverconsistency is based in part on the use of EY Canvas, ouronline audit platform. EY Canvas was broadly deployedbeginning in 2015 and is now used globally. It bettersupports audit execution, streamlines communications andenables us to provide a seamless audit.

We recently launched the EY Canvas Client Portal, whichadds to the leading-edge tools already offered to ourauditors. In addition, we have deployed the 2017 AuditMilestones Program globally, which establishes the use ofMilestones on selected PIE audits as one important step toimproving results and sustaining quality acrossengagements.

In 2016, we developed a network of Quality EnablementLeaders (QELs) and created a Global Audit QualityCommittee.These and other SAQ initiatives have helped us to continueto drive quality improvements. They demonstrate that auditquality is the single most important factor in our decision-making and the key measure on which our professionalreputation stands.

Tone at the topSenior EY and EY Lao leadership are responsible for settingthe right tone at the top and demonstrating EY’scommitment to building a better working world throughbehavior and actions. While the tone at the top is vital, ourpeople also understand that quality and professionalresponsibility start with them. Our shared values, whichinspire our people and guide them to do the right thing, andour commitment to quality are embedded in who we are andin everything we do.

The EY approach to business ethics and integrity iscontained in the EY Global Code of Conduct and otherpolicies, and is embedded in the EY culture of consultation,training programs and internal communications. Seniormanagement regularly reinforces the importance ofperforming quality work, complying with professionalstandards, adhering to our policies, leading by example andthrough various communications. Also, EY’s quality reviewprograms assess professional service as a key metric inevaluating and rewarding all professionals.


The EY culture strongly supports collaboration and placesspecial emphasis on the importance of consultation indealing with complex or subjective accounting, auditing,reporting, regulatory and independence matters. We believeit is important to determine that engagement teams andclients correctly follow consultation advice, and weemphasize this when necessary.

The consistent stance of EY Lao has been that noclient is more important than our professionalreputation — the reputation of EY Lao and thereputation of each of our professionals.

Code of conductWe promote a culture of integrity among our professionals.The EY Global Code of Conduct provides a clear set ofprinciples that guide our actions and our business conduct,and are to be followed by all EY personnel. The Code ofConduct is divided into five categories:

• Working with one another• Working with clients and others• Acting with professional integrity• Maintaining our objectivity and independence• Respecting intellectual capital

Through our procedures to monitor compliance withthe EY Global Code of Conduct, and through frequentcommunications, we strive to create an environment thatencourages all personnel to act responsibly, includingreporting misconduct without fear of retaliation.

The EY Ethics Hotline provides our people, clients andothers outside of the organization with a meansconfidentially to report activity that may involve unethicalor improper behavior and that may be in violation ofprofessional standards or otherwise inconsistent with theEY Global Code of Conduct. The hotline is operated by anexternal organization that provides confidential and, ifdesired, anonymous hotline reporting services forcompanies worldwide.

When a report comes into the EY Ethics Hotline, either byphone or internet, it receives immediate attention.Depending on the content of the report, appropriateindividuals from Risk Management, Talent, Legal or otherfunctions are involved to address the report. The sameprocedures are followed for matters that are reportedoutside of the EY Ethics Hotline.

Our values: who we are

People who demonstrate integrity, respect and teaming

People with energy, enthusiasm and the courage to lead

People who build relationships based on doing theright thing

Internal quality control systemEY Lao’s reputation for providing high-quality professionalaudit services independently, objectively and ethically isfundamental to our success as independent auditors. Wecontinue to invest in initiatives to promote enhancedobjectivity, independence and professional skepticism.These are fundamental attributes of ahigh-quality audit.

At EY Lao, our role as auditors is to provide assurance onthe fair presentation of the financial statements of thecompanies we audit. We bring together qualified teams toprovide our services, drawing on our proven experienceacross industry sectors and services. We continually striveto improve our quality and risk management processes sothat the quality of our service is at a consistently high level.

We recognize that in today’s environment — characterizedby continuing globalization and the rapid movement ofcapital — the quality of our audit services has never beenmore important. As part of EY Vision 2020, we continue toinvest heavily in developing and maintaining our auditmethodology, tools and other resources needed tosupport quality service delivery.

While the market and stakeholders continue to demandhigh-quality audits, they also demand increasingly efficientand effective delivery of audit services. In addition to theinvestment mentioned, EY continues to seek ways toimprove the effectiveness and efficiency of its auditmethodology and processes, while improving audit quality.

We work to understand where our audit quality may not beup to our own expectations and those of stakeholders,including external audit firm regulators. We seek to learnfrom external and internal inspection activities and toidentify root causes of adverse quality occurrences toenable us continually to improve audit quality, and webelieve that taking effective and appropriate actions toimprove quality is an important part of the audit inspectionsprocess.

Effectiveness of the quality control systemEY has designed and implemented a comprehensive set ofglobal audit quality control policies and practices. Thesepolicies and practices meet the requirements of theInternational Standards on Quality Control issued by theInternational Auditing and Assurance Standards Board(IAASB). EY Lao has adopted these global policies andprocedures, and has supplemented them as necessary tocomply with local laws and professional guidelines, and toaddress specific business needs.

We also execute the EY Audit Quality Review (AQR) programto evaluate whether our system of audit quality control hasoperated effectively so as to provide reasonable assurancethat EY Lao and our people comply with applicableprofessional and internal standards and with regulatoryrequirements.


The results of the AQR program and external inspectionsare evaluated and communicated within EY Lao to providethe basis for continual improvement in audit quality,consistent with the highest standards in the profession.

The GE is responsible for implementing quality improvementand protection programs across EY. As such, it reviews theresults of our internal AQR program and external regulatoryreviews, as well as any key actions designed to addressareas for improvement.

The recent results of such monitoring, together with therecent feedback from independent regulatory inspectionvisits, provide EY Lao with a basis to conclude that ourinternal control systems are designed appropriately and areoperating effectively.

Client acceptance andcontinuanceEY policyThe EY Global Client Acceptance and Continuance Policysets out principles for member firms to determine whetherto accept a new client or a new engagement, or to continuewith an existing client or engagement. These principles arefundamental to maintaining quality, managing risk,protecting our people and meeting regulatoryrequirements. The objectives of the policy are to:

• Establish a rigorous process for evaluating risk andmaking decisions to accept or continue clients orengagements

• Meet applicable independence requirements• Identify and deal appropriately with any conflicts

of interest• Identify and decline clients or engagements that pose

excessive risk• Require consultation with designated professionals to

identify additional risk management procedures forspecific high-risk factors

• Comply with legal, regulatory and professionalrequirements

In addition, the EY Global Conflicts of Interest Policy definesglobal standards for addressing categories of potentialconflicts of interest and a process for identifying them. Italso includes provisions for managing potential conflicts ofinterest as quickly and efficiently as possible through theuse of appropriate safeguards. Such safeguards range fromobtaining a client’s consent for EYG member firms to act fortwo or more clients to declining an engagement to avoid anidentified conflict.

The EY Global Conflicts of Interest Policy and associatedguidance were updated in early 2015. The updates take intoaccount the increasing complexity of engagements andclient relationships, and the need for speed and accuracy inresponding to clients. They also align with the latestInternational Ethics Standards Board for Accountants(IESBA) standards.

Putting policy into practiceWe use the EY Process for Acceptance of Clients andEngagements (PACE), a new intranet-based system, forefficiently coordinating client and engagement acceptanceand continuance activities in line with global, service lineand member firm policies. PACE takes users through theacceptance and continuance requirements, and identifiesthe policies and references to professional standardsneeded to assess both business opportunities andassociated risks.

As part of this process, we carefully consider the riskcharacteristics of a prospective client or engagement andseveral due diligence procedures. Before we take on a newengagement or client, we determine whether we cancommit sufficient resources to deliver quality service,especially in highly technical areas, and if the services theclient wants are appropriate for us to provide. The approvalprocess is rigorous, and no new audit engagement may beaccepted without the approval of our PPD.

In our annual client continuance process, we review ourservice delivery and ability to continue to provide qualityservice, and confirm that clients share EY Lao’scommitment to quality and transparency in financialreporting. The partner in charge of each audit, togetherwith our Assurance leadership, annually reviews ourrelationship with the audit client to determine whethercontinuance is appropriate.

As a result of this review, certain audit engagements areidentified as requiring and are then subjected to additionaloversight procedures during the audit (close monitoring),and some audit clients are discontinued. As with the clientacceptance process, our PPD is involved in the clientcontinuance process and must agree with the continuancedecisions.

Both client acceptance and client continuance decisionsconsider the engagement team’s assessment of whetherthe company’s management could pressure us to acceptinappropriate accounting, auditing and reportingconclusions to undermine quality. Considerations andconclusions on the integrity of management are essentialto acceptance and continuance decisions.

Performance of auditsAs part of EY Vision 2020, EY has invested significantly inimproving audit methodologies and tools, with the goal ofperforming the highest-quality audits in the profession. Thisinvestment is consistent with EY’s goal to have the leadingaudit practices in the profession by 2020 and reflects thecommitment to building trust and confidence in the capitalmarkets and in economies the world over.

Audit methodologyEY GAM provides a global framework for delivering high-quality audit services through the consistent application ofthought processes, judgments and procedures in all auditengagements.


Making risk assessments, reconsidering and modifyingthem as appropriate, and using these assessments todetermine the nature, timing and extent of audit proceduresare fundamental to EY GAM. The methodology alsoemphasizes applying appropriate professional skepticismin the execution of audit procedures. EY GAM is based onInternational Standards on Auditing (ISAs) and issupplemented in Lao to comply with the regulatory orstatutory requirements.

An EY auditor is presented with a version of EY GAMorganized by topic and designed to focus the audit strategyon the financial statement risks, and the design andexecution of the appropriate audit response to those risks.EY GAM consists of two key components: requirements andguidance, and supporting forms and examples. Therequirements and guidance reflect both audit standards andEY policies. The forms and examples include leadingpractice illustrations, and assist in performing anddocumenting audit procedures.

Using technology, EY GAM can be “profiled” or tailored topresent the relevant requirements and guidance, dependingon the nature of the entity being audited. For example,there are profiles for listed entities and for those considerednon-complex entities.

Enhancements to the audit methodology are made regularlyto address new standards, emerging auditing issues andmatters, implementation experiences, and external andinternal inspection results. In 2016, EY GAM was updated toinclude the new and revised ISAs dealing with auditorreporting, other information included in an annual reportand financial statement disclosures. EY GAM was alsoenhanced by adding guidance to address common questionsfrom audit teams and issues arising from inspections.

In addition, we monitor current and emerging developmentscontinually, and issue timely audit planning and otherreminders. These reminders emphasize areas noted duringinspections as well as other key topics of interest to ourregulators, including the International Forum ofIndependent Audit Regulators (IFIAR). These topics includeprofessional skepticism, group audits, revenue recognitionand engagement quality reviews.

EY GAM requires compliance with relevant ethicalrequirements, including independence from the companywe audit.

TechnologyOur audit engagement teams use technology to assist inexecuting and documenting the work performed inaccordance with EY GAM.

Beginning in late fiscal year 2015, we launched EY Canvas,our global audit platform that lies at the heart of the auditand enables us to provide a high-quality audit. This waslaunched on a phased basis across EYG member firmsglobally, with deployment completed in 2017. EY Canvas isbuilt using HTML5, state-of-the-art technology for webapplications. This allows us to provide heightened data

security and to evolve our software to respond to changesin the accounting profession and regulatory environment.

Through the use of profile questions, audit engagements inEY Canvas are automatically configured with informationrelevant to the company’s listing requirements and industry.This helps to keep our audit plans customized and up-to-date, and provides direct linkage to our audit guidance,professional standards and documentation templates. EYCanvas is built with a fresh, clear design and user interfacethat allows users to visualize risks and their relationship toour planned response and work performed in key areas. Italso enables a linkage for our group audit teams tocommunicate inter-office risks and instructions so that theprimary audit team can direct execution and monitorperformance of the group audit. The predecessor auditsupport tool, GAMx, will be decommissioned in our 2018fiscal year.

EY Canvas includes a Client Portal, released in April 2017,to assist teams in communicating with clients andstreamline their client requests. Mobile applications,integrated with EY Canvas, were released in fiscal year2017 that assist our people in their audit work; forexample, in monitoring the status of the audit, capturingaudit evidence securely and performing inventoryobservations.

Audit engagement teams use other software applications,forms and templates during various phases of an audit toassist in executing procedures, making and documentingaudit conclusions, and performing analysis.

EY Helix is our suite of data analytic tools for use in audits.Analytics is transforming the audit by analyzing largerpopulations of audit-relevant data, identifying unseenpatterns and trends in that data, and helping to direct ouraudit efforts. The use of analytics also allows us to obtainbetter perspectives, richer insights and a deeperunderstanding of transactions and areas of risk.

We have developed analytics that cover our clients’ end-to-end business operating cycles, supported by analytics-based audit programs to aid their application.

Using our analytics, our engagement teams can enhancetheir audit risk assessment, enabling the audit of higher-risktransactions, and assisting our people in asking betterquestions about audit findings and evaluating theoutcomes.

Formation of audit engagement teamsEY Lao policies require an annual review of partnerassignments by our Assurance leadership and PPD to makesure that the professionals leading listed-company auditspossess the appropriate competencies (i.e., the knowledge,skills and abilities) to fulfill their engagementresponsibilities, and are in compliance with applicableauditor rotation regulations.

The assignment of professionals to an audit engagement isalso made under the direction of our Assurance leadership.Factors considered when assigning people to audit teams


include engagement size and complexity, specializedindustry knowledge and experience, timing of work,continuity, and opportunities for on-the-job training. Formore complex engagements, consideration is given towhether specialized or additional expertise is needed tosupplement or enhance the audit engagement team.

In many situations, internal specialists are assigned as partof the audit engagement team to assist in performing auditprocedures and obtaining appropriate audit evidence. Theseprofessionals are used in situations requiring special skillsor knowledge, such as information systems, asset valuationand actuarial analysis.

Review and consultationReviews of audit workEY policies describe the requirements for timely and directsenior professional participation, as well as the level ofreview required for the work performed. Supervisorymembers of an audit engagement team perform a detailedreview of the audit documentation for accuracy andcompleteness. Senior audit executives and engagementpartners perform a second-level review to determineadequacy of the audit work as a whole, and the relatedaccounting and financial statement presentation. A taxprofessional reviews the significant tax and other relevantworking papers. For listed and certain other companies, anengagement quality reviewer (described below) reviewsimportant areas of accounting, financial reporting and auditexecution, as well as the financial statements of thecompany we audit and our audit report.

The nature, timing and extent of the reviews of audit workdepend on many factors, including:

• The risk, materiality, subjectivity and complexity of thesubject matter

• The ability and experience of the audit team memberspreparing the audit documentation

• The level of the reviewer’s direct participation in theaudit work

• The extent of consultation employed

Our policies also describe the roles and responsibilities ofeach audit engagement team member for managing,directing and supervising the audit, as well as therequirements for documenting their work and conclusions.

Consultation requirementsOur consultation policies are built upon a culture ofcollaboration, whereby audit professionals are encouragedto share perspectives on complex accounting, auditing andreporting issues. Consultation requirements and relatedpolicies are designed to involve the right resources so thataudit teams reach appropriate conclusions.

Consultation is built into the decision-making process;it is not just a process to provide advice.

For complex and sensitive matters, we have a formalprocess requiring consultation outside of the auditengagement team with other personnel who have moreexperience or specialized knowledge, primarily ProfessionalPractice and Independence personnel. In the interests ofobjectivity and professional skepticism, our policies requiremembers of Professional Practice, Independence andcertain others to withdraw from a consultation if theycurrently serve, or have recently served, the client to whichthe consultation relates.

Our policies also require that we document allconsultations, including written concurrence from theperson or persons consulted, in order to demonstrate theirunderstanding of the matter and its resolution.

Engagement quality reviewsEngagement quality reviews are performed by auditpartners in compliance with professional standards foraudits of all listed companies and those considered higherrisk. Engagement quality reviewers are experiencedprofessionals with significant subject matter knowledge.They are independent of the engagement team and ableto provide objective evaluation of significant accounting,auditing and reporting matters. In no circumstances maythe responsibility of the engagement quality reviewer bedelegated to another individual.

The engagement quality review spans the entireengagement cycle, including planning, risk assessment,audit strategy and execution. Policies and procedures forthe performance and documentation of engagement qualityreviews provide specific guidelines on the nature, timingand extent of the procedures to be performed, and therequired documentation evidencing their completion. OurPPD approves all engagement quality review assignmentsfor listed companies and those considered higher risk.

Audit engagement team resolution process fordifferences of professional opinionEY has a collaborative culture that encourages and expectspeople to speak up, without fear of reprisal, if a differenceof professional opinion arises or if they are uncomfortableabout a matter relating to a client engagement. Policiesand procedures are designed to empower members of anaudit engagement team to raise any disagreements relatingto significant accounting, auditing or reporting matters.

These policies are made clear to people as they join EY, andwe continue to promote a culture that reinforces a person’sresponsibility and authority to make their own views heard,and seek out the views of others.

Differences of professional opinion that arise during anaudit are generally resolved at the audit engagement teamlevel. However, if any person involved in the discussion of anissue is not satisfied with the decision, they refer it to thenext level of authority until agreement is reached or a finaldecision is made.

Furthermore, if the engagement quality reviewer makesrecommendations that the engagement partner does not


accept or the matter is not resolved to the reviewer’ssatisfaction, the audit report is not issued until the matter isresolved. EY policies require documentation ofdisagreements and their resolution.

Audit partner rotationEY supports mandatory audit partner rotation to helpstrengthen auditor independence. EY Lao complies with theaudit partner rotation requirements of the code of theIESBA, Law on independent Audit of Lao PDR andregulation of Mistry of Finance and Lao SecuritiesCommission Office, as well as the U.S. Securities andExchange Commission (SEC), where required. EY Laosupports audit partner rotation because it provides a freshperspective and promotes independence from companymanagement, while retaining expertise and knowledge ofthe business. Audit partner rotation, combined withindependence requirements, enhanced systems of internalquality controls and independent audit oversight, helpsstrengthen independence and objectivity, and are importantsafeguards of audit quality.

For PIEs where rotation of the audit partner is notmandated by local independence regulation or is lessrestrictive than the IESBA requirements, the EY GlobalIndependence Policy requires the lead engagement partnerand the engagement quality reviewer to be rotated afterseven years. For a new PIE (including a newly listedcompany) client, the lead engagement partner and theengagement quality reviewer may remain in place for anadditional two years before rotating off the team, if theyhave served the client for six or more years prior to thelisting. Following rotation, the partner may not resume thelead or engagement quality review role until at least twoyears have elapsed.

We employ tools to track partner rotation that enableeffective monitoring of compliance with requirements.We have also implemented a process for partner rotationplanning and decision-making that involves consultationwith, and approvals by, our Professional Practice andIndependence professionals.

Audit quality reviewsThe EY Global AQR program is the cornerstone of the EYprocess to monitor audit quality. EY Lao executes the GlobalAQR program, reports results and develops responsiveactions plans. The primary goal of the program is todetermine whether systems of quality controls, includingthose of EY Lao, are appropriately designed and followed inthe execution of audit engagements to provide reasonableassurance of compliance with policies and procedures,professional standards, and regulatory requirements. TheGlobal AQR program complies with guidelines in theInternational Standard on Quality Control No. 1 (ISQC No.1), as amended, and is supplemented where necessary tocomply with Lao regulatory requirements. It also aids EYLao’s continual efforts to identify areas where we can

improve our performance or enhance our policies andprocedures.

Implemented annually, the program is coordinated andmonitored by representatives of the Global PPD network,with oversight by Global Assurance leadership.

The engagements reviewed each year are selected on a risk-based approach, emphasizing audit engagements that arelarge, complex or of significant public interest. The GlobalAQR program includes detailed risk-focused file reviewscovering a large sample of listed and non-listed auditengagements to measure compliance with internal policiesand procedures, EY GAM requirements, and relevant localprofessional standards and regulatory requirements. It alsoincludes reviews of a sample of non-audit engagements.These measure compliance with the relevant professionalstandards and internal policies and procedures that shouldbe applied in executing non-audit services. In addition,practice-level reviews are performed to assess compliancewith quality control policies and procedures in thefunctional areas set out in ISQC No. 1. The Global AQRprogram complements external practice monitoring andinspection activities, such as regulatory inspectionprograms and external peer reviews.

AQR reviewers and team leaders are selected for their skillsand professional competence in accounting and auditing, aswell as their industry specialization; they often work in theGlobal AQR program for a number of years and are highlyskilled in the execution of the program. Team leaders andreviewers are assigned to inspections outside of their homelocation and are independent of the audit teams reviewed.

The results of the Global AQR program, external practice-monitoring and inspection activities are evaluated andcommunicated to improve quality. Any qualityimprovement plans describe the follow-up actions to betaken, the people responsible, the timetable and deadlines,and sign-off on completed actions. Measures to resolveaudit quality matters noted from the Global AQR program,regulatory inspections and peer reviews are addressed byAssurance leadership and our PPD. The actions aremonitored by our PPD and Assurance leadership. Theseprograms provide important practice monitoring feedbackfor our continuing quality improvement efforts.

External qualityassurance reviewEY Lao’s audit practice is subject to annual inspection bythe Ministry of Finance (MOF). As part of its inspections, theMOF evaluates quality control systems and may reviewselected engagements.

The last quality assurance inspection by MOF took place in 3October 2017. The final report on the inspection was issuedon 18 October 2017.

We respect and benefit from the MOF inspection process.We thoroughly evaluate points raised during the inspectionin order to identify areas where we can improve auditquality. Together with our AQR process, external


inspections aid us in making our audits and related controlprocesses of the highest quality in the interests of investorsand other stakeholders.


Compliance with legalrequirementsThe EY Global Code of Conduct provides a clear set ofstandards that guide our actions and business conduct.EY Lao complies with applicable laws and regulations, andEY’s values underpin our commitment to doing the rightthing. This important commitment is supported by anumber of policies and procedures, explained in theparagraphs below.

Anti-briberyThe EY Global Anti-bribery Policy provides EY people withdirection around certain unethical and illegal activities. Itemphasizes the obligation to comply with anti-bribery lawsand provides greater definition of what constitutes bribery.It also identifies reporting responsibilities when bribery isdiscovered. In recognition of the growing global impact ofbribery and corruption, efforts have been increased toembed anti-bribery measures across EY.

Insider tradingThe EY Global Insider Trading Policy reaffirms the obligationof our people not to trade in securities with insiderinformation, provides detail on what constitutes insiderinformation and identifies with whom our people shouldconsult if they have questions regarding theirresponsibilities.

Trade sanctionsIt is important that we are aware of the ever-changingsituation with respect to international trade sanctions. EYmonitors sanctions issued in multiple geographies andprovides guidance to our people on impacted activities.

Data privacyThe EY Global Personal Data Privacy Policy sets out theprinciples to be applied to the use and protection ofpersonal data, including that relating to current, past andprospective personnel, clients, suppliers, and businessassociates. This policy is consistent with applicable laws andregulations concerning data protection and privacy formaintaining and processing personal data. Furthermore, wehave a policy to address our specific Lao data privacyrequirements and business needs.

Document retentionEY Lao’s record retention policy applies to all engagementsand personnel. This policy addresses documentpreservation whenever any person becomes aware of anyactual or reasonably anticipated claim, litigation,investigation, subpoena or other government proceedinginvolving us or one of our clients that may relate to ourwork. It also addresses Lao legal requirements applicable tothe creation and maintenance of working papers relevant tothe work performed.


Independence practicesEY Global Independence policies require EY Lao and ourpeople to comply with the independence standardsapplicable to specific engagements, including, for example,the Code of Ethics of the IESBA, Law on Independent Auditof Lao PDR and Code of Ethics for Professional Accountantsissued by Ministry of Finance, Lao PDR.

We consider and evaluate independence from severalperspectives, including our financial relationships and thoseof our people; employment relationships; businessrelationships; the permissibility of non-audit services weprovide to audit clients; applicable firm and partner rotationrequirements; fee arrangements; audit committee pre-approval, where applicable; and partner remuneration andcompensation.

Failure to comply with applicable professionalindependence requirements will factor into decisionsrelating to a person’s promotion and compensation,and may lead to other disciplinary measures, includingseparation from EY Lao.

EY Lao has implemented EY’s global applications, tools andprocesses to support us, our professionals and otheremployees in complying with independence policies.

EY Global Independence PolicyThe EY Global Independence Policy contains theindependence requirements for member firms,professionals and other personnel. It is a robust policypredicated on the IESBA Code of Ethics and supplementedby more stringent requirements where prescribed by agiven regulator. The policy also contains guidance to helppeople apply the independence rules. The EY GlobalIndependence Policy is readily accessible and easilysearchable on the EY intranet.

Global Independence System (GIS)The GIS is an intranet-based tool that helps EY professionalsidentify the listed entities from which independence isrequired and the independence restrictions that apply. Mostoften, these are listed audit clients and their affiliates, butthey can be other types of attest or assurance clients too.The tool includes family-tree data relating to affiliates oflisted audit clients and is updated by client-servingengagement teams. The entity data includes notations thatindicate the independence rules that apply to each entity,helping our people determine the type of services that can

be provided or other interests or relationships that can beentered into.

Global Monitoring System (GMS)The GMS is another important global tool that assists inidentifying proscribed securities and other impermissiblefinancial interests. Professionals ranked as manager andabove are required to enter details about all securities theyhold, or those held by their immediate family, into the GMS.When a proscribed security is entered or if a security theyhold becomes proscribed, professionals receive a notice,and are required to dispose of the security. Identifiedexceptions are reported through the Global IndependenceIncident Reporting System (GIIRS) for regulatory matters.

GMS also facilitates annual and quarterly confirmation ofcompliance with independence policies, as described below.

Independence complianceEY has established a number of processes and programsaimed at monitoring the compliance with independencerequirements of EY member firms and their people. Theseinclude the following activities, programs and processes.

Independence confirmations

Annually, EY Lao is included in an Area-wide process toconfirm compliance with the EY Global Independence Policyand process requirements, and to report identifiedexceptions, if any.

All EY professionals, and certain others, based on their roleor function, are required to confirm compliance withindependence policies and procedures at least once a year.All partners are required to confirm compliance quarterly.

Global independence compliance reviews

EY conducts internal procedures to assess member firmcompliance with independence matters. These reviewsinclude aspects of compliance related to non-audit services,business relationships with the companies we audit andfinancial relationships of member firms.


Personal independence compliance testing

Each year, the EY Global Independence team establishes aprogram for testing compliance with personal independenceconfirmation requirements and with reporting ofinformation into GMS. For the 2016 testing cycle, EY Laotested more than [x] partners and other personnel.

Non-audit services

We monitor compliance with professional standardsgoverning the provision of non-audit services to auditclients through a variety of mechanisms. These include theuse of tools, such as PACE (see page 15) and ServiceOffering Reference Tool (see below), and training andrequired procedures completed during the performance ofaudits and internal inspection processes.

Global independence learning

EY develops and deploys a variety of independence learningprograms. All professionals and certain other personnelare required to participate in annual independence learningto help maintain our independence from the companieswe audit.

The goal is to help EY people understand theirresponsibility and to enable each of them, and theirmember firms, to be free from interests that might beregarded as incompatible with objectivity, integrity andimpartiality in serving an audit client.

The annual independence learning program coversindependence requirements focusing on recent changes topolicy, as well as recurring themes and topics ofimportance. Timely completion of annual independencelearning is required and is monitored closely.

In addition to the annual learning program, independenceawareness is promoted through a number of events andmaterials, including new-hire programs, milestone programsand core service line curricula.

Service Offering Reference Tool (SORT)

We assess and monitor our portfolio of services on anongoing basis to confirm that they are permitted by law andprofessional standards, and to make sure that we have theright methodologies, procedures and processes in place asnew service offerings are developed. We restrict servicesfrom being provided that could present undueindependence or other risks. SORT provides EY people withinformation about EY service offerings. It includes guidancearound which services can be delivered to audit and non-audit clients, as well as independence and other riskmanagement issues.

Business Relationship Evaluation Tool (BRET)

The BRET process helps to support compliance withindependence requirements. Our people are required to useBRET in many circumstances to identify, evaluate andobtain advance approval of a potential business relationshipwith an audit client.

Audit committees and oversight of independenceWe recognize the important role audit committees andsimilar corporate governance bodies undertake in theoversight of auditor independence. Empowered andindependent audit committees perform a vital role on behalfof shareholders in protecting independence and preventingconflicts of interest. We are committed to robust andregular communication with audit committees or thosecharged with governance. Through EY quality reviewprograms, we monitor and test compliance with EYstandards for audit committee communications, as well asthe pre-approval of non-audit services, where applicable.


Continuing education ofaudit professionalsProfessional developmentThe EY career development framework, EYU, provides ourpeople with opportunities for the right experiences, learningand coaching to help them grow and achieve their potential.

The learning component of EYU is based on an extensiveand globally consistent learning curriculum that helps all EYpeople develop the right technical and personal leadershipskills, wherever they are located around the world. Coreaudit training courses are supplemented by learningprograms that are developed in response to changes inaccounting and reporting standards, independence andprofessional standards, and emerging practice issues.

EY has redesigned its core audit training into “The AuditAcademy” — a curriculum for learning. This high-impact andaward-winning learning combines interactive classroom-based simulations and “on-demand” e-learning moduleswith relevant reinforcement and application support.

Where an EYG member firm audits and reviewsInternational Financial Reporting Standards (IFRS) financialstatements, relevant team members undertake learning tobecome IFRS-accredited.

EY Lao requires our audit professionals to obtain at least 20hours of continuing professional education each year and atleast 120 hours over a three-year period. Of these hours,40% (eight hours each year and 48 hours over a three-yearperiod) must cover technical subjects related to accountingand auditing.

In addition to formal learning, professional developmentoccurs through coaching and experiences our professionalsreceive on the job. Coaching helps to transform knowledgeand experience into practice.

Experienced professionals are expected to coach anddevelop less-experienced personnel to create a continuallearning environment. We also manage the assignment ofour people to particular engagements in a systematic waythat helps provide them exposure to a range of experiencesas part of their own development.

Knowledge and internal communicationsIn addition to professional development and performancemanagement, we understand the importance of providingclient engagement teams with up-to-date information tohelp them perform their professional responsibilities. EYmakes significant investments in knowledge andcommunication networks to enable the rapid disseminationof information to help people collaborate and share bestpractices. Examples include:

• EY Atlas, which includes local and internationalaccounting and auditing standards, as well asinterpretive guidance; replacement for GlobalAccounting and Auditing Information Tool (GAAIT)since the fiscal year 2017

• Publications such as International GAAP, IFRSdevelopments and illustrative financial statements

• Global Accounting and Auditing News, a weekly updatecovering assurance and independence policies,developments from standard setters and regulators, aswell as internal commentary thereon

• Practice alerts and webcasts covering a range of globaland country-specific matters designed for continuousimprovement in member firms’ Assurance practices

Performance managementA comprehensive performance management processrequires our people to set goals, have clear workexpectations, receive feedback and talk about theirperformance. The Performance Management andDevelopment Process (PMDP) is designed to help our peoplegrow and succeed in their careers.

Under the PMDP, periodic job performance reviews arecombined with annual self-appraisal and reviews. As part ofthe annual review process, each professional, in conjunctionwith their counselor (an assigned, more experiencedprofessional), identifies opportunities for furtherdevelopment. Professionals and their counselors are guidedby a set of expectations that articulate the knowledge, skillsand behaviors that should be maintained and developed fortheir respective ranks. These expectations are derived from,and align with, the EY Global strategy and values.


Revenue andremunerationFinancial informationRevenue represents combined, not consolidated, revenuesand includes expenses billed to clients and revenues relatedto billings to other EYG member firms. Revenue amountsdisclosed in this report include revenues from both auditand non-audit clients.

Revenue is presented in accordance with Lao AccountingLaw and included for:

1. Revenues from the statutory audit of annual andconsolidated financial statements of PIEs, and entitiesbelonging to a group of undertakings whose parentundertaking is a PIE

2. Revenues from the statutory audit of annual andconsolidated financial statements of other entities

3. Revenues from permitted non-audit services to entitiesthat are audited by the statutory auditor or the auditfirm

4. Revenues from non-audit services to other entities

Financial information for the period ended 31December 2017 expressed in billion Lao KIP

ServiceRevenue

PercentPIE Non-PIE Total

Statutory AuditEngagements 7.1 5.9 13.0 88%

Other services 0.4 1.3 1.7 12%

Total revenue 7.5 7.2 14.7 100%

Partner remunerationQuality is at the center of the EY strategy and is a keycomponent of EY performance management systems. EYLao partners and other professionals are evaluated andcompensated on the basis of criteria that include specific

quality and risk management indicators, covering bothactions and results.

Global performance management processes cover partnersin EYG member firms around the world. They reinforce theglobal business agenda by linking performance to widergoals and values. These ongoing cyclical processes includegoal setting, personal development planning andperformance review, and are tied to partners’ recognitionand reward. Documenting partners’ goals and performanceis the cornerstone of the evaluation process. A partner’sgoals are required to reflect various global priorities, one ofwhich is quality.

EY prohibits evaluating and compensating lead auditengagement partners and other key audit partners on anengagement based on the sale of non-Assurance services totheir audit clients. This reinforces to our partners theirprofessional obligation to maintain our independence andobjectivity. This reinforces that professionals are obligatedto maintain independence and objectivity.

Specific quality and risk performance measures have beendeveloped to account for:

• Providing technical excellence• Living the EY values as demonstrated by behaviors and

attitude• Demonstrating knowledge of, and leadership in, quality

and risk management• Complying with policies and procedures• Complying with laws, regulations and professional

duties• Contributing to protecting and enhancing the EY brand

The EY partner compensation philosophy calls formeaningfully differentiated rewards based on a partner’slevel of performance, as measured by the Global PartnerPerformance Management (GPPM) process, which is ourglobal evaluation process for partners in EYG member firmsaround the world. Partners are assessed by their firmsannually on their performance in delivering quality,exceptional client service and people engagement alongsidefinancial and market metrics.


We operate under a system that requires quality tobe a significant consideration in a partner’s overallyear-end rating.

To recognize different market values for different skills androles, and to attract and retain high-performing individuals,the following factors are also considered when wedetermine our partners’ total reward:

• Experience• Role and responsibility• Long-term potential

Instances of non-compliance with quality standards result inremedial actions, which may include compensationadjustment, additional training, additional supervision orreassignment. A pattern of non-compliance or particularlyserious non-compliance may result in actions that includeseparation from EY Lao.

EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction and advisoryservices. The insights and quality services we deliver help buildtrust and confidence in the capital markets and in economies theworld over. We develop outstanding leaders who team to deliveron our promises to all of our stakeholders. In so doing, we play acritical role in building a better working world for our people, forour clients and for our communities.

EY refers to the global organization, and may refer to one ormore, of the member firms of Ernst & Young Global Limited, eachof which is a separate legal entity. Ernst & Young Global Limited, aUK company limited by guarantee, does not provide services toclients. For more information about our organization, please visitey.com.

©2016 Ernst & Young Lao Co.,LtdAll Rights Reserved.

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ED NoneThis material has been prepared for general informational purposes only and isnot intended to be relied upon as accounting, tax, or other professional advice.Please refer to your advisors for specific advice

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