Low audit quality work performed on engagements is one of the root
causes of practice review failure. Low or poor audit quality work is
associated with sub-standard work performed by auditors resulting in
non-compliance with auditing and accounting standards and legal
requirements. This may be due to a weak or lack of understanding of the
client’s business or international auditing and accounting standards.
Inadequate implementation of the elements of ISQC 1, which pertains to
the internal control system in the firm, is also another cause in
practice review failure. Sole-proprietorships mistakenly assume that
ISQC 1 is not applicable to them due to their size and therefore have
not set up proper policies and procedures to strengthen their internal
control and governance of their practices.
The lack of documentation in the audit working papers of a majority of
audit firms continues to be an issue which have not been properly
addressed by practitioners. While standard audit programmes are in use
by audit firms to achieve consistency in their work, the practitioners
have not ensured that audit tick marks in the boxes of the audit
programmes are sufficiently and appropriately supported by working
papers to evidence work done. Inevitably, there is no cross-referencing
between the audit programmes and the audit working papers. This is an
example of the weaknesses of practitioners who maintain that they do not
know how to implement ISQC 1 in their firm.
HERE to view the common findings.
To improve the audit quality of audit firms which failed practice review
for the first time and therefore will be reviewed for a second time in a
follow-up review, the MIA has designed remedial programmes that covers
audit of key areas and ISQC1 which are aimed at enhancing audit quality
of practitioners at all levels.