Look and Learn
The ICAEW film False Assurance can help firms to focus on aspects of audit quality where there are weaknesses, as Louise Sharp explains
Audit quality is a journey, not a destination, so there are always opportunities for improvement. When the ICAEW Quality Assurance Department (QAD) recently published Audit Essentials 2017, a large part of it focused on the audit of Financial statements prepared using FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, but some of the areas of weakness it highlighted are not new.
Finding new ways to draw attention to some of the areas where the quality of audits raises key concerns can be challenging, for regulators, for QAD reviewers, for those responsible for audit quality in firms and for those working in audit. So it is helpful to explore what can be achieved when a training aid such as the ICAEW film drama False Assurance is used to facilitate discussions around some of the situations that may create audit quality challenges.
False Assurance provides a fresh – and interactive – way of looking at some of the areas where audit quality still requires improvement. When John Selwood used it in presentations during the faculty’s spring roadshow, the film provoked much discussion among delegates about the good – but mainly bad – behaviours evidenced by the board of directors, the audit committee and the auditors, alongside recognition that it could be all too easy for auditors to find themselves facing similar issues or being in similar situations.
To set the scene: the story revolves around the audit over a two year period of a listed company, D-Merton, which designs radar systems. The audit is performed by a small audit team (partner, senior audit manager and two juniors) at TYSL Accountants. The film is fast paced as there is a lot to cover in 45 minutes and it is broken down into four sections to help aid discussion and consideration of the issues.
The film is packed full of issues – too many to discuss in detail in this article, and we wouldn’t want to spoil it for those who are going to see the film – but here are a few of the key areas where it highlights issues related to audit quality.
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