Today ASIC has issued a report on the results from its audit firm inspections for the 12 months to 30 June 2019, and a supplementary report of audit quality measures and indicators.
“Following the recent hearings of the audit inquiry, ASIC’s latest audit inspection report is a timely compass for the audit profession on where we need to focus and improve audit quality,” said Amir Ghandar, CA ANZ Reporting & Assurance Leader.
“We take these results very seriously and have a three-pronged approach off the back of these findings to disseminate specific learnings, tools and guides; facilitate direct engagement between members and ASIC delving into the topics raised; and build targeted training.
“This includes our recently launched root cause analysis methodology for audit inspections, which is a comprehensive approach for auditors and firms to interrogate what has caused audit quality problems and solve them at the root.
“We commend ASIC on the greater focus on firm governance and culture, consideration of enforcement action and balanced scorecard incorporating a broader set of indicators which we have been calling for over some time.
“However we encourage the regulator to provide more graduated information on how it views the severity of issues identified.
“We recognise the clear need for the audit profession to improve which is one of the reasons why we are proposing a 15-point plan directly targeted at quality, confidence and the relevance of risks auditors are focused on, including strengthening prohibitions on non-audit services, oversight and skills of auditors, and how potential conflicts of interest are addressed.
“Taken as a whole, the measures underscore a process where ASIC's bar is rising, risk targeting is getting sharper, and this is overall leading to better outputs in the integrity of financial reporting. Notably, actual misstatements identified have steadily decreased down from 11% in 2015 to 2% in the latest report.”
Our 15 point plan
CA ANZ hands down comprehensive plan to improve confidence and quality of auditRead submission
The Australian parliamentary inquiry into regulation of audit
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