An inspector calls
Expecting a visit from ICAEW's Quality Assurance Department? As they explain here, the experience will probably be far more positive and constructive than you image.
Preparing for a visit from the Quality Assurance Department (QAD) calls for more than coffee and the best biscuits. However, as many audit firms will know from experience, it probably requires less forward planning than a client audit.
For those who have not yet had a QAD visit – or have not been visited for some time – the prospect of one should not be cause for alarm. We understand that some firms feel anxious beforehand but most tell us afterwards they find the visit both positive and constructive.
Before we visit, we will notify you of our plans about 12 weeks in advance. The letter will inform you of the date as well as the expected duration and scope of the visit. This may be audit only or combined with investment business and practice assurance.
If you have other unavoidable commitments there will be a chance to reschedule the visit but you need to reply promptly otherwise we may not be able to agree to an alternative date. Please check that all of the relevant people at your firm will be available.
The reviewer normally calls you about a week before the visit to discuss any questions you may have. If you would like to speak to them sooner, please contact QAD to advise us of this and the reviewer will call you as soon as they can.
Our letter includes a list of items we will need to see. These are things you will probably already have, so preparing for the visit should not be time-consuming.
It would be helpful if you have all the items to hand for the opening meeting. We would also suggest that you check your last audit compliance review to make sure you have taken action on any matters raised – we will want to discuss this with you.
On the day
Your visit will start with an opening meeting that will last between one and two hours, depending on the size of your firm and the scope of the visit. This is our opportunity to find out about your audit practice, procedures, audit clients and staff. If you have any particular concerns we will be happy to discuss them with you at this point. We then review a sample of audit files and information, including your audit compliance review.
We will pass on any questions we have on your audit files in a Microsoft Word document. This will include a column in which you can enter your responses – we ask you to do this as soon as possible during the visit. We will discuss the points with you to help us reach a fair conclusion.
If we find that audit work needs to be improved we will be keen to understand the reasons why it is not up to the standard expected and we will work with you to help resolve any issues. Our reviewers have plenty of experience and can draw on this to make constructive suggestions.
At the conclusion of the visit we will hold a closing meeting with you. The agenda will include a summary of our findings and highlight any significant issues. It can be difficult to predict the timing of the closing meeting but your reviewer will keep you informed at all times.
While we will be as open as possible with you about the likely outcome of your visit, please bear in mind that our visits are subject to quality control review. The final decision could rest with the audit registration committee.
After the visit
We will ask you to send us your responses to the closing meeting within 15 business days. Most organisations manage to respond within this period but please contact us if you need more time.
Once we have received your response, we will let you know if we need any further information. You will always be sent written confirmation of the outcome of your visit. If you would like to find out more about the QAD visiting process, please look at our booklet, Audit Monitoring Visits.
Reasons to be cheerful Coxeys' QAD experience
The prospect of a visit from the Quality Assurance Department may feel like a burden but it can be a boon. “There is no need to fear the QAD,” says Anthony Lewis, a director with Coxeys and one of the four responsible individuals (RIs) at the Wrexham firm. “If our experience shows anything, it is that QAD are very helpful people,” he adds.
He believes the recent visit to the firm was more than just a tick in a compliance box. “It is a comfort blanket to have someone come in from outside and view your work,” says Lewis. “Despite being a member of a worldwide organisation you are an isolated cell preparing audit files based on reading the regulations, attending courses and peer reviews. Approval and confirmation that what you are doing is correct and that your approach is in line with regulations is the main benefit of the QAD visit.”
ICAEW’s Audit Monitoring Visits leaflet helped the firm to prepare, so Lewis and the other RIs knew what needed to be available and what was going to be reviewed. “At the meeting with the inspector on the first day we discussed what audits we undertook, the size and turnover of the clients being audited, whether they were specialist and what sector they were in. From this the inspector made her selection of audit files to review,” he explains.
Coxeys is one of the largest audit firms in north Wales, with audit clients across the UK that range from international companies to small charities. “In the afternoon the inspector gave us a list of files she wanted to review and she selected one file per RI and also Solicitors’ Accounts Rules assignments,” says Lewis. The review took the afternoon of day one and all of day two.
On completion of the reviews each RI was emailed any queries and given the opportunity to go through them with the inspector – a process that was not as confrontational as you might imagine. It was not a case of “This is your report, please respond formally”, recalls Lewis but a much more open “This is your report, please let me know which points are fair comment and which points are actually dealt with in the file”.
Although the audit review process involved only the four RIs at Coxeys, the firm invited the inspector to meet with some of its qualified staff too. “She was more than happy to discuss their approach to planning with them,” says Lewis.
He explains why this was of great benefit. “It not only gave them direction, but also made them more confident in the work they were producing in regard to the planning of assignments. There was ample opportunity to discuss any number of issues we had in terms of audit work,” he says.
The helping hand of QAD did not disappear when the inspection was completed. “We have had several contacts with the inspector since she came here and she has been an immense help in a number of areas,” says Lewis. Rather than fear the arrival of QAD, he suggests, businesses should welcome the inspectors.
This article first appeared in the October 2012 edition of Audit & Beyond, the magazine of the ICAEW Audit and Assurance Faculty.