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How can firms improve on audit weaknesses?

Most audit monitoring visits conclude without any follow-up action, but improvements to some audit work weaknesses remain possible in many firms, says Lesley Clarke, Professional standards, ICAEW.

Every year ICAEW makes audit monitoring visits to hundreds of audit firms. In most cases, audit files viewed are found to be of a good or acceptable standard. However, the relatively few instances where issues do arise offer an opportunity for many firms to learn from others’ shortcomings. In 2018 ICAEW carried out audit monitoring reviews at around 600 firms of various sizes. Clients ranged from listed and public interest entities to smaller and less complex entities.

The overall results are similar to 2017 – no major concerns arising on the vast majority of visits and 74% of the audit files we reviewed were found to be of a good or acceptable standard. There are a few subtle movements that appear to be fairly insignificant if we look at the trend over the past few years; however, there are some points worth drawing out. Excluding ‘risk’ visits and reviews of firms without any audits, we concluded 71% of our visits without the need for any follow-up action. Of the remaining 29%, 19% were asked to submit some further evidence of improvement and 10% gave rise to issues that were significant enough to warrant a report to the Audit Registration Committee (ARC).Room at the top