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The commencement of audit monitoring
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  1. The commencement of audit monitoring

  2. Introduction • ICAB’s audit monitoring programme will commence shortly • Programme has been established under auspices of ICAC • All ICAB practising firms that conduct audit work will be subject to monitoring • Purpose of this meeting is to explain how monitoring will work

  3. Agenda for this session • ICAB’s approach to audit regulation • The role of ACCA • Why ACCA? • ACCA personnel • How firms will be selected for visits • Notification to firms • Planning visits • The structure of the visit • File examination

  4. Agenda for this session (continued) • How audit work will be assessed • Closing meeting • Reporting and the firm’s response • Implementing recommendations • How to prepare for monitoring • ACCA Quality Checked • More information • Concluding remarks

  5. ICAB's approach to audit regulation • ICAB's approach to audit regulation is modelled on the approach adopted by ACCA • ICAB has delegated the conduct of monitoring visits to ACCA • ICAB will retain full responsibility for regulation • ICAB's regulatory approach will be firm but fair • ICAB will encourage firms with weak standards to improve and only take action if they fail to do so • The approach is intended to improve standards, not to penalise firms

  6. The role of ACCA • ACCA appointed only to undertake monitoring visits • ACCA’s monitoring will meet the requirements of IFAC • ICAB retains absolute control over the regulation of ICAB • firms • When undertaking audit monitoring visits, ACCA will also roll out ACCA Quality Checked to ACCA firms – at no cost to ICAB or firms

  7. Why ACCA? • ACCA is a statutory regulator of auditors in the United • Kingdom and Ireland • ACCA has 17 years of experience in monitoring and • regulation • ACCA undertakes monitoring for five other professional bodies and the Dubai Financial Services Authority • ACCA undertakes monitoring visits for the Law Society (of • England) and the English Audit Commission • Using ACCA will ensure confidentiality and no conflicts • The ICAB/ACCA joint examination scheme demonstrates • that ICAB and ACCA can work well together

  8. ACCA Personnel • Peter Large, Executive Director – Professional Standards • -Responsible at director level • Sha Ali Khan, Head of Practice Monitoring • - Responsible for overseeing delivery of all services under the ICAB/ACCA agreement • Prajesh Damani, Global Assurance Manager • - Responsible for quality control and managing all monitoring visits to ICAB firms

  9. ACCA Personnel (continued) • AN Other, Senior Practice Reviewer • - To be based in the Caribbean and undertake most monitoring visits to ICAB firms • Other ACCA Senior Practice Reviewers • - To support AN Other when monitoring larger firms

  10. Selection of firms for visits • Firms will be selected by ICAB • Firms will be selected at random or if ICAB has a reason to • believe a visit is necessary • The random selection will be stratified to ensure a • representative mix of small and large firms are monitored • each year • Routine monitoring once every 6 years • Early follow up visits if a monitoring visit has an unsatisfactory outcome

  11. Notification of visits • ICAB will notify firms in writing that they will be visited and instruct ACCA • Firms to complete a short pre-visit questionnaire for ACCA • Pre visit questionnaire asks for: • - Firm’s addresses and contact details • - Names and qualifications of principals • - Confirmation whether firm has documented quality control procedures • - Details of audit clients • ACCA will then contact the firm by telephone to plan the visit

  12. Planning monitoring visits • Based on pre-visit questionnaire and telephone discussion • with contact partner • Date of agreed visit will be confirmed in writing • Confirmation letter will include list of documents to be made • available at the visit

  13. Structure of the monitoring visit • Opening meeting • - To obtain information about the firm, its clients and its quality control policies and procedures (ISQC1) • File examination • - To assess whether audit work has been undertaken in accordance with auditing standards • Closing meeting • - To discuss and agree matters arising and suggest improvements

  14. File examination • Cover all partners’ work • Larger and more complex clients • Public interest entities • Latest completed audits – not earlier years

  15. Assessment of audit work • Based on examination of a sample of audit work completed • recently • No account will be taken of work performed but not recorded • File to be assessed as unsatisfactory if failure to comply with • auditing standards results in a significant risk that a material misstatement remains undetected • All files inspected must be assessed as satisfactory • otherwise the overall outcome of the visit will be assessed as • unsatisfactory • Serious breaches of independence requirements or ISQC1 can also render the outcome as unsatisfactory

  16. Closing meeting • All significant matters arising from the monitoring visit will be discussed • Subsequent report will be based on matters discussed at this meeting • Offers the firm an opportunity to correct any misunderstanding and refute any criticism • Intended to assist firms to take corrective action in the future • Will contain clear message as to whether the outcome is satisfactory or unsatisfactory

  17. Reporting and the firm’s response • Report will summarise overall outcome of the visit and list all • deficiencies noted in audit work. It will deal with weaknesses • and not strengths and provide recommendations • ICAB will subsequently inform the firm of: • - Overall outcome of the visit • - Action, if any, required by the firm • - Whether an early follow up visit is likely

  18. Implementing recommendations • Essential to improve standards • Must be effected soon after receipt of report • Write to ACCA if further clarification needed on any aspect of the report • Ensure recommendations properly implemented • Consider seeking advice and confirmationfrom another firm that all recommendations implemented effectively

  19. How to prepare for monitoring • Key is to ensure you comply with auditing standards • Use an effective audit programme • Record all your audit work and reasoning in detail • Dont bury your head in the sand! • Ensure all documents requested are ready before the visit • Get the most out of your visit by listening carefully to what is said • Dont panic! The first visit will generally be “advisory”

  20. Highlight and overwrite dummy text with your titles and texts. Restrict yourself to a maximum of 6 points per slide. If you require more points on a specific topic use as many following slides as necessary. Do not change the fonts or sizes used in the blanks. If you require more of any slide, go to the ‘Slide Sorter View’, click on the required slide and hit ‘Control D’, this can be repeated to create as many duplicates as required. What is ACCAQuality Checked? A new practice assurance scheme Covers quality controls and procedures Covers all other professional services Enhances the quality and efficiency of professional services Encourages adoption of “best practice”

  21. Highlight and overwrite dummy text with your titles and texts. Restrict yourself to a maximum of 6 points per slide. If you require more points on a specific topic use as many following slides as necessary. Do not change the fonts or sizes used in the blanks. If you require more of any slide, go to the ‘Slide Sorter View’, click on the required slide and hit ‘Control D’, this can be repeated to create as many duplicates as required. What is ACCAQuality Checked? Will be conducted by ACCA in conjunction with audit monitoring visits to firms with ACCA principals The implementation of recommendations will not be compulsory Firms that demonstrate “best practice” are awarded a kitemark for promotional use

  22. More information From ICAB or From ACCA ACCA 29 Lincolns’ Inn Fields London WC2A 3EE United Kingdom E-mail: Sha.AliKhan@accaglobal.com Telephone: +44 (0) 20 7059 5931 Website: www.accaglobal.com

  23. Concluding remarks • Purpose of monitoring is to improve standards and approach will involve assisting firms • Monitoring visit reports will include all deficiencies found • even though the outcome of the visit may be satisfactory • Regulatory action will only be taken where a firm has serious deficiencies and fails to effect improvements

  24. Thank you