Simplifying the audit through innovation. PwC Accounting Symposium August 7, 2015. PwC Audit Transformation 19

Simplifying the audit through innovation PwC Accounting Symposium August 7, 2015 PwC Audit Transformation 19

Simplifying the audit through innovation A closer look What s driving our transformation Globalization Technology Clients Our people Regulatory Economics People Approach Technology The PwC Audit PwC Audit Transformation 15

Simplifying the audit through innovation Our story Innovation is imperative to growth and success in any business. At PwC, we re simplifying the way we do audits through innovation. With major investments in technology, processes improvements & more thoughtful development for our people, we will continue to deliver high quality and improve the audit experience for our clients and our people. With PwC, get more of an advantage out of your audit. PwC Audit Transformation 14

Simplifying the audit through innovation New performance Smoother workflows and stronger collaboration New clarity Consistent execution and greater visibility New perspectives Deeper insights and advice PwC Audit Transformation 13

Technology in the audit Technology PwC Audit Transformation 5

PwC Audit Transformation 6

PwC LLP 7

Data Auditing technology vision On a journey to standardize data acquisition and centralize data transformation procedures. This data repository will be available to support automated testing procedures and other analytics, powering the PwC audit. Extract Transform Test Discover A single global approach to the acquisition of data. Client data at the transaction level across multiple ERP platforms Use automated procedures to transform client inputs into common data models enriched with market data A suite of tools embed PwC s proprietary business rules and power our risk-based audit approach and analytics A global approach to delivering insight through visualization and analysis Audit Report Management and AC Communications Insights Market data Consistent data extraction experience for our clients A common data model powering all our tools and consistency in our methodology Eliminating unnecessary duplication in tools meeting global needs A common global client reporting and insight delivery experience PwC 5 8

Technology in the audit Technology PwC Audit Transformation 9

Connect Anywhere any time PwC Audit Transformation 10

Count 158,000 global users Automating and standardizing inventory count testing, interfacing with Aura to provide immediate recording of results PwC LLP 11

Automated Confirmation Tool 158,000 global users Automates the end-to-end accounts receivable and payable confirmation process. A web-based portal, it ensures secure handling of confidential data. PwC LLP 12

Enhancing audit processes Approach PwC Audit Transformation 13

Engagement Performance & Quality (EPQ) PwC Audit Transformation 14

A thoughtful approach to Talent Management People PwC Audit Transformation 15

Feeling the difference in our staffing mix We re on the cutting-edge of how to develop and deploy our people so clients consistently get a team that s trained, experienced and cost optimized. Illustrative example of audit yesterday vs. tomorrow Before After Shared services (GDM) Local engagement team Flexible seasonal talent 2016 and Beyond: Our Path to a Category of One PwC April 2015 16

The impact of business model shifts on skill requirements PwC Audit Transformation 19

Skills necessary to be successful A response to business shifts Technology knowledge Data analytics skills Project management skills Advancements in business and technical acumen Coaching, review & supervision PwC Audit Transformation 18

PwC s response Recruit, develop & retain the best in the profession PwC Leadership Development Experience Global development framework Continuous feedback Personalized career planning Access to Career Coach Robust training curriculum Rich client experiences that promote growth & development PwC Audit Transformation 19

Open dialogue PwC Audit Transformation 20

Data Driven Decision Management July 2015

Rapid Change and Rapid Response The World is Changing Around Us And Fast Every business is feeling the unprecedented impact of rapidly changing global environment, economies, and technological breakthroughs. Leaders are urgently searching for the people who can help their organizations adapt this new reality. 8 of 10 CEOs are looking to hire people with a much broader range of skills than in the past What are those skills that standout? PwC Audit Transformation 22

Convergence of Skills with Data Differentiator How we approach our clients is how tomorrow s leaders should approach their learning Confluence of skills Sector skills Regulatory skills Technology skills Data differentiator 50% - Sector 35% - Technical 15% - Regulatory Sector and Regulatory Skills Knowing our client s business problems and how to solve them Technology Skills Knowledge of the new norm for technical tools at businesses disposal. Data is what makes it different 100101010 101010010 101010010 101010111 010101010 Data Skills Tomorrow s Leaders Destined for Success in the Workplace PwC Audit Transformation 15

What Data Skills are Essential? Enabling value extraction from the data, using analytics Data Analytics is the science of examining raw data with the purpose of drawing conclusions about that information. In essence, it refines the data to extract value Users can view and understand data intuitively. Also includes quantitative statistics and visualization Creating insights and discovery from raw data is how PwC derives value out of data scientists of tomorrow. Benefits Include Reduced compliance and risk issues Lower costs of risk and control functions Increased value and productivity of internal audit Improved communication and relationships between lines of defense PwC Audit Transformation 24

Trends Continue Data Analytics Disrupts Business Headline highlights from the past 60 days Big Data for Bigger Sales: Thermo Fisher Uses New Tech to Mine Sales Leads (June 29, 2015) Wal-Mart Scours ebay for Tech Talent (June 23, 2015) Airbnb Open Sources Software to Lure Talent Amid Insane Competition (June 17, 2015) Johnson & Johnson Goes Back to Campus for New Hires (June 5, 2015) BBC Facial Recognition Software Analyzes Audience Response (May 29, 2015) All articles appeared in the Wall Street Journal on the dates listed Analytics helps elevate business PwC Audit Transformation

Application Examples of these Techniques in Action PwC Audit Transformation 19

Anti Money Laundering Combatting terrorism by identifying money movement in the global financial systems that exhibits patters most likely linked to terrorist financing Problems High rate of false positive alerts High cost of reviewing false positives Complexity of the markets Alternative means of transferring value (person-to-person, trade finance, casino chips) Bad guys are really good at trying to evade detection Solutions Data visualization to analyze the entire population of alerts Hypothesis formed and multiple regression models prioritize review Threshold tuning limits alerts that are not productive Scenario simulation leads to what-if analysis capability Decreased cost, increased compliance, stopping more illicit funds movements People Technolog y Analytics Solutions & Cost Savings PwC Audit Transformation 27

Unstructured Analytics Upwards of 80% of new data generated today is unstructured Internet Data (e.g. clickstream, social media) Contract analytics (e.g. client or internal obligations) Primary research (e.g. surveys, experiments) Secondary research (e.g. consumer, business data) Location data (e.g. mobile device, geospatial data) Image data (e.g. video, satellite image, surveillance) Supply chain data (e.g. vendor catalog, traffic data) Device data (e.g. sensors, PLCs, RFID, telemetry) People Technolog y Analytics Solutions & Cost Savings

Voice and Video Analytics Speech and video analytics allow organizations to make sense of the increasing amount of data recorded by employees, call centers and cameras. These solutions provide insight that can boost operational efficiency, decode human behavior, and find new opportunities for growth and improvement. 1 2 Financial Services Recorded calls can uncover the biggest pain points that customers have with products, while video from banking locations can provide better security and marketing insights. Additionally, regulatory documentation, derivative agreements and legal compliance for financial services can all be quickly addressed Suspicious Persons Profiles Call Center Records Audio from Video Voice and Video Analytics Police Body Cameras Dashboard Cameras Stationary Cameras Safe City City and local governments have been increasing the amount of cameras on the streets due to public outcry about safety and perceived injustice. The wealth of data gathered from cameras can help improve safety and traffic flow, as well as monitor the interactions between police officers and citizens.

Visualization Data visualization no longer needs to be a representation of a sample of data, but can instead represent entire populations of data in real time 1 Refinements in thresholds (tuning) and analyzing output are new tasks that auditors are expected to execute on a regular basis 2 Analytics can no longer be only a value-add, but rather should be used as a means of transforming the audit process 3 Visualization can help monitor the real-time pulse of the audit process and identify risks and gaps in reconciliation as well as help in prioritizing tasks 30

Bridging the demand gap How can you help? Delivery Model The delivery model will continue to change and evolve, with individual exposed earlier in their careers to building relationships, coaching, and collaborating, both physically and virtually, in a global marketplace. Imperatives To be prepared, students coming in to the work place will need exposure to: Data Analytics Statistics Data Visualizations Software applications and business applications 27

Bridging the Demand Gap Recommendations for Accounting Programs Undergraduate Accounting Programs Technical exposure to contemporary coding (i.e. Python, Java) Core skills in SQL, Excel, basic scripting Statistics programming (R, Matlab, SAS) Introduction to data visualization tools (Tableau, Spotfire, Qlikview, D3.JS) Introduction of more advanced topics (Github for collaboration, multivariate statistical analysis) Graduate Accounting Programs Multivariate statistical analysis, including conjoint, cluster, discriminant function and factor analysis Advanced data skills including applied analytics, predictive analytics, machine learning Advanced database and data handling methods, including both structured and unstructured databases (SQL, MongoDB, Hadoop, etc) Communicating the results of data analytics in an understandable way, such as through data visualization Data Analytic Technolog y Intro and Advanced Statistics Data Visualization Successful Future Accountants 32

Student feedback after they join us Analytics Technology Data More advanced tools and techniques analytics, visualization, statistical modelling Excel knowledge deep enough, but other technology needs increased exposure (i.e. SQL, coding) Data lifecycle concepts and methods to check your data assumptions help translate case studies into real world examples The accounting professional is alive and well, and we ve been granted a unique opportunity to help change our profession, and have our accounting professionals viewed as problem solvers, invaluable to the organization in a data-centric society and marketplace. PwC Audit Transformation 33

Simplifying the audit through innovation PwC Accounting Symposium August 7, 2015 PwC Audit Transformation 19