Audit file reviews ordered by ACCA

Audit file review orders

Key features

Basis of ACCA’s audit file assessment

Guidance for firms (and “hot” reviewers)

Examples of “hot” review deficiencies

Audit file reviews ordered by ACCA: contents

Ordered by Admissions and Licensing Committee or Regulatory Assessors

Ordered after unsatisfactory outcome to a monitoring visit

Principal objective – provides safeguard on audit reports issued

Secondary objective – provides training to firm on ISA compliance

Audit file review orders

Committee or assessor decides number of files to be reviewed

Practice Monitoring staff decide which files to be reviewed

All reviews normally “hot”

Firm chooses reviewer from ACCA’s list of Approved Training Companies

Audit file review orders

Firm not required to submit reviewer’s reports to ACCA

Instead, ACCA conducts early re-visit

At re-visit ACCA reviews audits – some subject to “hot” review, some not

Quality of “hot” review assessed by comparison with ACCA’s review

Audit file reviews: key features

Based on concept of “reasonable assurance” (ISA 200)

ACCA identifies all deficiencies and considers each individually

ACCA considers risk of material misstatement remaining undetected

Therefore one significant deficiency may render audit unsatisfactory

Basis of ACCA’s audit file assessment

Agree scope, responsibilities and terms in engagement letter

Reviewer to understand firm’s audit procedures

Ideally, reviewer should assess audit plan before work commences

Review must be documented

Guidance for firms (and “hot” reviewers)

Important to identify relative significance of deficiencies identified

Reviewer to identify key points to be resolved before issue of audit report

Clear conclusion as to satisfactory/unsatisfactory

Continuation of some “hot” or cold reviews advisable even if outcome of next visit is satisfactory

Guidance for firms (and “hot” reviewers)

Failure to identify all significant deficiencies

Giving the firm benefit of doubt where work recorded in inadequate detail

Additional work recorded against review points – not on working papers

Examples of “hot” review deficiencies

Overall conclusion not recorded – or inconsistent with deficiencies identified

Marking scheme used to determine overall conclusion

No guidance given on how to rectify deficiencies

Examples of “hot” review deficiencies

Reviewers who fail to provide effective reviews are removed from ACCA’s list of Approved Training Companies

Reviewers that succeed in assisting firms to “pass” next monitoring visit are often asked by firms to continue to provide training/review services

Concluding remarks