Audit quality Independent Audit

Transcription

1 Audit quality Independent Audit

2 Contents Acceptance Independence Risk assessment Learning & resources Ethics & compliance Audit methodology Quality assurance Peer review

3 Audit quality framework Specific quality programs Recognize: We are a profession organized by law, with focus on meeting / exceeding stakeholders expectations Audit Quality Plans Leadership tone Regulator relationship management Execute: Deliver quality audits and value to all stakeholders Global Audit Imperatives Extended auditor reporting Audit implementation according to relevant standards Excel Analytics Audit A Quality Milestones in general & for Listed / PIE in particular Internal Controls Program EQCR / 2 nd Partner review Improve: Continuously measure, learn, and drive to improve quality audits Practice Review and External Inspection Monitoring Audit Quality Indicators Casual Factor Analysis Audit Diagnostics Mandatory learning 3

4 Audit quality imperatives 1. Acceptance Client Acceptance Policies & procedures for accepting new clients and retaining clients Engagement Acceptance Procedures for accepting new engagements 2. Risk assessment Normal Greater than normal Much Greater than normal Determine audit strategy, plan and resources with relevant expertize based on risk classification 4

5 Audit quality imperatives 3. Independence Fact and appearance Monitoring Independence Internal System to test and monitor independence; which is elementary to qualify for independent audit. 4. Learning & resources Relevant industry experience Continuous update on relevant auditing and accounting standards Continuous professional education Learning curriculum in technical matters to all professionals Dedicated learning programs for audit partners and managers. 5

6 Audit quality imperatives 5. Ethics & compliance Ethical behavior in observing Integrity & Objectivity Compliance with relevant laws & regulations Comply with Ethical standards of IFAC and code of Ethics set by Local regulations Monitor compliance with local regulations 6. Audit methodology Systematic approach to the audit Planning, execution & conclusion Initial planning Development of audit plan Execution of audit plan Conclusion & reporting 6

7 Comprehensive approach to Audit quality Assess and respond to engagement risk Select the engagement team Establish terms of the engagement Understanding of business and control environment Engage in Initial Planning Assess risk at the account-balance and potential-error levels Plan tests of controls Obtain management representations Conclude & report Conclude and Report Risk Assessment Develop the Audit Plan Execute the Audit Plan Perform tests of controls: Evaluate control deficiencies Perform substantive testing 7

8 Audit quality imperatives 7. Quality assurance Quality control review o At engagement level o At practice level Assignment of experienced professionals to perform Q.A on audit engagements Perform regular practice wide review to ensure Compliance with relevant standards of audit quality and adherence to policies & procedures in relation to Independence, Ethics, CPE and HR in general 8

9 Audit quality imperatives 8. Peer review Robust & systematic Designed to help audit firms increase their focus on the proper design and operating effectiveness of their systems of quality control. identifying systemic causes and appropriate remediation of nonconforming engagements and systemic weaknesses Evolve with professional development The AICPA Peer Review Board issued last week an exposure draft that describes proposed changes to the AICPA s current standards for performing and reporting on peer reviews. (the proposals are intended to reinforce the need for adequate planning and preparation for a peer review by firms and peer reviewers 9

10 Causal factor analysis Activities to be performed Develop action plan to be included in the audit quality plan Perform ongoing monitoring to determine effectiveness of corrective actions (e.g., mid-year assessment) Perform causal factor analysis on all findings identified: System of quality control Review of individual engagements (Steps performed vary due to nature, extent, significance and pervasiveness of the findings identified) Develop a strong understanding of findings & group together for analysis, if appropriate Understand & review what exists in the system of quality control that relates to the findings / groups of findings Perform deep dive into selected findings or groups of findings Develop & implement corrective actions to address findings selected for deep dives & other findings not subject to a deep dive analysis Document causal factors & action Determine relationship between causal factors identified & the system of quality control, including summarizing & analyzing results at the member firm level Identify potential improvements needed to the system of quality control 10

11 Q&A

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