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Audit Compliance and Monitoring

Audit Compliance and Monitoring. Ian Pickering Compliance Officer. Before the visit. Compliance officer will contact you Notification letter (Annex 1) List of information required at the visit (Annex 2). The visit. Opening meeting Review of files and other information

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Audit Compliance and Monitoring

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  1. Audit Compliance and Monitoring

  2. Ian Pickering Compliance Officer

  3. Before the visit • Compliance officer will contact you • Notification letter (Annex 1) • List of information required at the visit (Annex 2)

  4. The visit Opening meeting Review of files and other information Closing meeting

  5. After the visit – visit report Conclusion (Annex 3) • Eligibility - Global Practising Regulations (GPRs)- Control issues (including PR6(g))- Professional Indemnity Insurance (PII)- Fit and Proper- Continuity • Outcome of the visit- in accordance with SAS/regulatory requirements but some deficiencies- inconsistent standard- serious deficiencies NB May also refer to any RPC breaches where applicable

  6. Outstanding matters (Annex 4) There may be matters which require further information or explanations to be provided to the monitoring unit • Confirmation of receipt • Measures to be taken to improve audit work • Information not available at the visit (CPD/PII/Continuity)

  7. Covering letter/introduction (Annex 5) • Covering letter - refers to visit and encloses the visit report • Introduction • Scope of the visit - Period covered/routine or other visit/confirm eligibility an d compliance with GPRs • Audit – Number of clients. Number of Files reviewed and outcome. - Regulatory – File(s) reviewed and outcome

  8. Detailed findings (Audit/Regulatory) Overall control/independence issues/ indicatable offences Specify the files inspected Compliance issues arising from review of files listed (cross referenced to files)- Engagement letters- Knowledge of the business- Planning- Control/review- Evidence (fixed assets, stock, debtors, bank, creditors, specialised audit reports, analytical review, subsequent events, going concern, financial statements- Regulatory files eg Law Society

  9. Detailed findings (other) Professional Indemnity Insurance (level of cover, exclusions) Continuing Professional Development (records not available, inadequate number of hours) Continuity agreement (no agreement in place or agreement with a firm which is not a Registered Auditor

  10. Future Action • A summary of what is needed to rectify the deficiencies highlighted in the report. • Issue engagement letters • Compile an adequate record of the firm’s knowledge of the client • Plan all audits adequately • Ensure working papers contain an adequate record of the work to be done • Audit evidence (existence/ownership/ completeness/valuation) • Review procedures Contd.

  11. Future Action Contd. • Financial statements/disclosure checklist • Regulatory work • Other matters (PII/CPD/Continuity)

  12. Self diagnostic checklist (Annex 6) Designed to highlight common deficiencies arising in Monitoring Unit reports The checklist can be found on the website www.accaglobal.com/professionalstandards/monitoring

  13. Knowledge of the business Demonstrate an adequate level of knowledge of the client’s business (management, major products, customers and suppliers) Accounting system (how does it operate?) Laws and regulations

  14. Planning/audit programme Completing the planning checklist does not usually result in effective planning Need to spell out the key areas AND the necessary audit work. May need to tailor the audit programme if it does not cover the necessary work identified in the plan Programme should be cross-referenced to the record of audit evidence

  15. Working papers Assess accounts preparation work and show how it achieves audit objectives Working papers should clearly show what was done and why (purpose/objective) Is it clear what any ticks/symbols mean? Summarise and evaluate where necessary (may lead to requirement for additional testing)

  16. Audit evidence Existence of fixed assets- brought forward AND acquired in year- basis of sample selection Stock (Existence, completeness and valuation- attendance at stock count- evaluate stock count procedures- test counts from physical stock to stock records and vice versa- valuation work (including check on post year end sales for net realisable value) Completeness of creditors- look for evidence of unrecorded liabilities rather than confirming the accuracy of recorded liabilities Contd.

  17. Audit evidence Contd. Completeness of income- need to start at the stage prior to the sales invoice- may need to devise a special approach- particular care with cash businesses

  18. Thank you

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