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Nearly 20% of audit engagements carried
out by large Australian firms did not contain appropriate evidence
to support key audit conclusions, Australian Securities Investment
Commission (ASIC) inspections have found.

National firms, such as the Big Four, carried
out better documented audits, with 91% of engagements providing
sufficient evidence. Only 71% of engagements carried out by
networks of firms provided enough evidence to satisfy
inspectors.

The regulator and audit watchdog, ASIC,
inspected 88 audits and seven review engagements carried out by 19
firms between 1 January 2008 and 30 June 2009.

Problems relating to documentation and evidence
were the major concern, being picked up in a quarter of
engagements.

The watchdog also noted that inspections
identified a number of cases requiring improvements in areas
related to the global financial crisis, such as the appropriate use
of experts in testing asset valuations.

ASIC said Australian audit quality compared
favourably internationally.

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