IAASA has published its 2023 quality assurance review reports in respect of seven firms that perform statutory audits of public-interest entities in Ireland. The reports summarise IAASA’s inspection of each firm’s implementation of the International Standard on Quality Management (Ireland) 1 (ISQM 1) which was effective for the first time during this inspection period.
The inspection included an assessment of the design of each firm’s system of quality management and an evaluation of the quality objectives, quality risks and related responses identified. The quality assurance review reports include any findings and recommendations made by IAASA to the firms regarding their system of quality management.
The reports also summarise the results arising from IAASA’s inspection of a sample of audits of public-interest entities performed by each firm, including the grades assigned to the audits inspected and any key recommendations made to the firm.
Taken together, the reports show that while findings of issues in firms’ overall systems of quality have declined, there has been an increase in the number of audit file inspections where improvements were required. In 2023 23% of files inspected required improvement, up from 11% in 2022. While the issues varied across files inspected, there were consistent findings in relation to the review of financial statement disclosure, audit of related party transactions, and communications with those charged with governance.
Commenting on these results, IAASA chief executive Kevin Prendergast said: “The results of the 2023 inspections are disappointing, with 23% of audits inspected requiring improvement. Our team takes a risk based approach to inspections, seeking to identify where there is a greater risk of poor audit performance, meaning that the results are not representative of the quality of all audits performed.
“Notwithstanding this, clearly there is work to be done to improve the consistency of performance. We expect audit firms to carry out a robust root cause analysis to address the issues identified. We will continue to work with the audit firms under our remit to drive improvements in audit quality.”
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