ICAEW Regulatory Board publishes its 2020 audit monitoring report

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02 Oct, 2020

The Institute of Chartered Accounts in England and Wales (ICAEW) Regulatory Board has published the results from the ICAEW’s Quality Assurance Department (QAD) 2019 monitoring visits.

The review detail the findings from reviews of 960 audit files across a wide range of firms. The ICAEW indicates that the majority of the files reviewed “achieved the standards expected, with good practice in many areas”. However, it does express concern that 18% of audits required improvements and 8% needed significant improvement.

The report is split in two parts. It explains:

  • how firms can improve the quality of their audit work based on the findings of the ICAEW’s Quality Assurance reviews during 2019;
  • the changes ICAEW require firms to make including the introduction of root cause analysis; and
  • the importance of audit quality, the future of audit and ICAEW’s approach to monitoring.

The report details that improvements can be made regarding: 

  • Auditor scepticism, robust management challenge and sufficient audit documentation in three key areas that rely on significant judgement:
    • Going concern
    • Long-term construction contracts
    • Property valuations
  • Documentation/evidence on the audit file supporting responses in audit work programmes and checklists and work performed. Additionally documentation of consideration of estimates, judgements and uncertainties.

Whilst the findings from the report note that audits need to improve in certain areas, overall, the 2019 results found a slight reduction in the most serious cases referred to the independent Audit Registration Committee (ARC) for it to consider taking action.

As well as identifying key areas for improvement the report also highlights examples of good practice. The report identifies regular external cold file reviews, and the effective use of root cause analysis as key tools for driving improvement

A press release and link to the full report is available on the ICAEW website here.

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