• Register
Return to: Home > News > Regulation > Audit Inspection Unit issues 2010 annual report

Audit Inspection Unit issues 2010 annual report

UK inspectors have found a lack of auditor scepticism and cases where auditors altered audit files after an inspection request, according to an annual review of the nine largest UK firms.

The Audit Inspection Unit (AIU) reviews the quality of the statutory audits of listed and other major public interest entities that fall within its scope, as determined each year by the Professional Oversight Board. The inspections also investigate policies and procedures supporting audit quality.

In its report, the AIU highlighted a number of deficiencies, including:

  • Firms altering audit files after the date of an AIU request, which happened on one occasion;
  • A lack of sufficient audit evidence obtained or recorded to support the judgments;
  • A lack of confirmations to confirm the existence of material assets and liabilities;
  • A lack of a formal paper to support the board’s assessment of going concern; and,
  • Auditor’s reports being signed prior to the completion of all necessary work;

The AIU also noted that audit firms had responded well to challenges arising from the global financial crisis in relation to the audit of going concern.

“While the number of good quality audits we have seen has increased, I am disappointed that the number of audits assessed as requiring significant improvement remains too high,”  the Professional Oversight Board chair Barbara Mills commented.

“Firms must make more effort to ensure that the improvements in their procedures are reflected in individual audit engagements.”

The report recommended auditors exercise greater professional scepticism when reviewing management’s judgments relating to fair values and the impairment of goodwill and other intangibles relevant to the consideration of going concern.

The watchdog also expressed concerns about one firm’s growth strategy of selling non-audit services to audit clients.

 

Top Content

    HONG KONG NATIONALS: UNDERSTANDING VISA AND TAX WHEN MOVING TO THE UK

    Over 2 million Hong Kongers learned recently that they may soon be offered a route to UK citizenship following China’s introduction at the end of June of its controversial Security Law in the territory.

    read more

    SASB IMPLEMENTATION SERIES: COMMUNICATING ESG TO MAINSTREAM INVESTORS

    As part of a series of webinars, the Sustainability Accounting Standards Board (SASB) took a closer look at how to communicate ESG initiatives and progress to mainstream investors

    read more

    REPORTING AND COMPLIANCE: WHY WE NEED A DATA REVOLUTION

    Commerce no longer adheres to national boundaries: the largest international organisations to the smallest businesses operate in a global market. However, rules for corporate reporting and compliance do adhere to borders, write IMA’s Jeff Thomson and Liv A Watson

    read more

    CORONAVIRUS TIMELINE: REACTIONS FROM THE ACCOUNTANCY PROFESSION

    As the Coronavirus (COVID-19) continues to spread across the world, the International Accounting Bulletin and The Accountant will be collating all the latest news and updates from the profession on the pandemic’s impact.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.