This is how it starts……….

A, B, C, D4, D3, D2, D1or

Good/Satisfactory, Unsatisfactory Improvements Req’d, Unsatisfactory Significant Improvements Req’d, Regulatory

Action Req’d or

“You just want it to end!”

• ISQC 1 & IES 8 Policies and Procedures *• Up to date Audit Procedures • Decently Documented Audit Files• Sufficient Audit Evidence on file• Completed Annual Audit Compliance Reviews• Review Audit Client Listings – Ensure reconciles with number of audit

clients per Annual Return• CPD records – get them up to date• Anti-Money Laundering Policies and Procedures *• Up to date Accounts Disclosure Checklists (make sure they are used) *

Don’t take the review personally!

* More effort and cost to fix the problem than prevent the problem!

Financial Statement Technical Issues:

Consider:

Financial Statements with Qualified Audit Reports

Financial Statements with Unqualified Audit Reports

Accounting Policy disclosures:(FRS 18 / Section 10 FRS 102)

Typical Offenders:

• Revenue Recognition• Deferred tax• Fixed assets and Depreciation

Qualified Audit Reports: • Basis of Preparation• Going Concern – especially if Emphasis of Matter

Expect FRS 102 to have an impact in 2016 on issues arising here

Related Party notes and disclosure of directors remunerationFRS 8/ Section 33 FRS 102/ Companies Acts 2014

Typical offenders:

• Omission of RTP’s – e.g. Rent and ultimate controlling party

• Companies Act 2014 Directors Remuneration disclosure requirements

• Non-distinguishing between Directors Current Account and Loan Account

Companies Act 2014 rules on loans etc. causing issues Remember: Not required to approve Summary Approval Procedure

for Restricted Directors Loans, but will be required to audit them.

Big Focus on Ethics:

• Application of Ethical Standards – Provision available for small entities (ES – PASE)

• Ethical Standards for Auditors – ES 1 to ES 5

• Reinforced by Statutory Audit Directive 2010• Statutory Instrument (SI) 220/2010

Far too important to ignore!

Issues specific to Qualified Audit Reports!

Inconsistent Directors Report

Incorrect format of Audit Report, not putting headings in right order.

Inadequate disclosure on Going Concern

No completed accounts disclosure checklist therefore inadequate disclosure of items such as:• Exceptional Items• Debt restructuring – e.g. debt write-off’s, analysis of debt, etc.• Breach of covenant disclosures• Post Balance Sheet Adjusting Events

Property Valuations and Impairment still raising it’s head!

Poor Audit Planning including:

Failure to conduct meaningful planning analytics

Failure to record a thought out risk assessment relevant to the audit client

Incorrect application of ISA 320 in calculating materiality

Failure to consider controls or to document walkthrough tests

Poor documentation of audit planning meeting

No communication with TCWG of audit plan

Fieldwork and completion sketchy in parts:

Correlation between technical issues in the financial statements and areas of the audit file where testing is weak.

Sufficient Audit evidence lacking in parts and overreliance on management representation.

Failure to adequately consider and evidence going concern assumption. Bank letters continue to frustrate!

Over reliance on generic solicitor letter response without querying legal fees in the accounts.

Evidence of undue influence from management of client regarding disclosure of related party transactions, ultimate controlling party and directors remuneration.

AVOID

Don’t Panic

Professional External Audit Compliance Review Simulates the process Assists you in preparing for the real thing Identifies issues you can’t – i.e. Unknown Unknown’s!

Keep software up to date

Use effective Audit Procedures Make those in the firm who use them know how to use them

Focus on “Relevant” CPD Sea of change out there – focus on what is relevant to your

clients and your practice.

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To help your practice ‘prepare for’ or ‘respond to’ a monitoring visit, for in-firm training or External Audit Compliance Reviews or Cold File Reviews

Please contact Níall at 01-637 7382

Other services provided by Practice Consulting to firms:

Investment Business Polices and Procedures Anti-Money Laundering Policies and Procedures Investment Business Compliance Reviews Clients Money Regulations Specialist Audit Advice Procedures for Quality Audit (general and specialist) Staff training workshops

Or talk to us if you want to improve practice development, growth or if you are interested in Practice Merger, Acquisition, selling or Succession Planning within the firm.