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Enhancing Audit Quality: Training and Findings Overview

Explore common issues, training needs, and key messages from the QAD Forum findings in October 2007, covering ISAs, ethical standards, audit systems, and more. Discover underlying causes and recommendations for improving audit quality.

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Enhancing Audit Quality: Training and Findings Overview

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  1. QAD findingsCCAB Training Providers’ ForumOctober 2007

  2. Introduction • QAD visits - all sizes of firm • Session outline • QAD findings • Underlying causes • Key messages

  3. QAD findings • ISAs (UK & Ireland) – current issues • ISQC1 • Ethical Standards • Accounts disclosure

  4. ISAs (UK & Ireland) Overall picture • Audit quality • Comparison with SAS compliance • Main areas of difficulty……..ISA 315! • Other common points

  5. ISA 315 (& 330) - main problem areas • Documenting background information covering all required elements • Determining what controls are relevant to the audit • Evidence of design and implementation work • Identification of significant risks and linkage to work planned • Risk identification – differentiating between inherent and control risk.

  6. ISA 315 – extent of work on controls? • Judgement • Audits of smaller entities

  7. ISAs – other common points • ISA 240; enquiries of management; focus of engagement team meeting; revenue recognition; management override; written representations • ISA 260 – communicating significant audit findings • Old chestnuts • rigour of substantive analytical procedures • dealing with uncorrected misstatements

  8. ISA issues – underlying causes (1) • Reliance on audit systems without full understanding of the ISAs • Difficulties in applying internal control concepts to smaller entities • Ensuring the right people are involved at the right time

  9. ISA issues – underlying causes (2) • Coping with extensive checklists • Some fraud requirements not very visible in audit systems eg fraud risk within revenue recognition, management override. • Timing issues – update of systems.

  10. ISQC1 • Still some lack of awareness in smaller firms • Belief that only applies to large firms • Lack of tailoring of standard manuals • Mostly a documentation issue

  11. Ethical Standards – common issues • Non-audit services – accounting services • Definition of accounting services (“we just process the TB on IRIS”) • Documentation of safeguards • PASE • Confusion between exemptions and alternative provisions • Long association • Process for monitoring period as RI • Documentation of safeguards/communication to the client

  12. Accounts disclosure – desktop reviews Common issues: • SME accounts - handout • Charity accounts - review of accounts of smaller charities (incoming resources between £10k and £250K) - handout

  13. Key messages (1) Training needs • Understanding ISA 315 • Applying ISA 315 to smaller clients • Substantive analytical procedures • Ethical Standards • Accounts presentation issues – SMEs and charities

  14. Key messages (2) Audit systems • “Wood for trees”. Too many checklists? • Catering for increasing requirements in the future • Prompt and responsive updates

  15. Wrap up • Good start with ISA implementation but still some way to go • Training needs identified • How much more can be added to audit programmes and checklists? Impact on audit quality? • Questions?

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