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QAD findings CCAB Training Providers’ Forum October 2007

QAD findings CCAB Training Providers’ Forum October 2007. Introduction. QAD visits - all sizes of firm Session outline QAD findings Underlying causes Key messages. QAD findings. ISAs (UK & Ireland) – current issues ISQC1 Ethical Standards Accounts disclosure. ISAs (UK & Ireland).

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QAD findings CCAB Training Providers’ Forum October 2007

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  1. QAD findingsCCAB Training Providers’ ForumOctober 2007

  2. Introduction • QAD visits - all sizes of firm • Session outline • QAD findings • Underlying causes • Key messages

  3. QAD findings • ISAs (UK & Ireland) – current issues • ISQC1 • Ethical Standards • Accounts disclosure

  4. ISAs (UK & Ireland) Overall picture • Audit quality • Comparison with SAS compliance • Main areas of difficulty……..ISA 315! • Other common points

  5. ISA 315 (& 330) - main problem areas • Documenting background information covering all required elements • Determining what controls are relevant to the audit • Evidence of design and implementation work • Identification of significant risks and linkage to work planned • Risk identification – differentiating between inherent and control risk.

  6. ISA 315 – extent of work on controls? • Judgement • Audits of smaller entities

  7. ISAs – other common points • ISA 240; enquiries of management; focus of engagement team meeting; revenue recognition; management override; written representations • ISA 260 – communicating significant audit findings • Old chestnuts • rigour of substantive analytical procedures • dealing with uncorrected misstatements

  8. ISA issues – underlying causes (1) • Reliance on audit systems without full understanding of the ISAs • Difficulties in applying internal control concepts to smaller entities • Ensuring the right people are involved at the right time

  9. ISA issues – underlying causes (2) • Coping with extensive checklists • Some fraud requirements not very visible in audit systems eg fraud risk within revenue recognition, management override. • Timing issues – update of systems.

  10. ISQC1 • Still some lack of awareness in smaller firms • Belief that only applies to large firms • Lack of tailoring of standard manuals • Mostly a documentation issue

  11. Ethical Standards – common issues • Non-audit services – accounting services • Definition of accounting services (“we just process the TB on IRIS”) • Documentation of safeguards • PASE • Confusion between exemptions and alternative provisions • Long association • Process for monitoring period as RI • Documentation of safeguards/communication to the client

  12. Accounts disclosure – desktop reviews Common issues: • SME accounts - handout • Charity accounts - review of accounts of smaller charities (incoming resources between £10k and £250K) - handout

  13. Key messages (1) Training needs • Understanding ISA 315 • Applying ISA 315 to smaller clients • Substantive analytical procedures • Ethical Standards • Accounts presentation issues – SMEs and charities

  14. Key messages (2) Audit systems • “Wood for trees”. Too many checklists? • Catering for increasing requirements in the future • Prompt and responsive updates

  15. Wrap up • Good start with ISA implementation but still some way to go • Training needs identified • How much more can be added to audit programmes and checklists? Impact on audit quality? • Questions?

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