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Summary - EUROSAI Seminar on Audit Quality

By Jeanette Taylor,2014-05-19 12:58
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Quality Control for Financial Audit ? UK. Having high quality staff is key for deliveringFinancial Audit Experiences in Quality Control - Estonia

    SUMMARY PREPARED BY GARETH CALLER (UK NAO)

    EUROSAI Seminar on Audit Quality

    Budapest (Hungary), 1-2 March 2007

DAY 1

Introduction

    ? Applying audit quality requires a systematic, institution-wide approach; ? Most quality problems are due to poor management either at the audit team level or at the

    SAI level.

Guidelines on Audit Quality

    ? Presentation covered a synopsis of the Guidelines on Audit Quality; ? Guidelines are fairly generic as intended to be suitable for Audit Office and Court of

    Audit models and for Financial and Performance Audits;

    ? Clear focus on the importance of recruitment, training and performance appraisal system; ? Include a discursive section on managing the relationships with key stakeholders; ? Interesting and useful discussion about the differing meanings of assurance and control in

    different languages;

    ? Discussion about the differing importance of quality control (i.e. hot reviews) and quality

    assurance (i.e. cold reviews).

Hungarian Experiences in Implementing IFAC Standards on Audit Quality

    ? Overview of the decision and process for introducing IFAC standards for the Hungarian

    private sector;

    ? The regulations for quality control are freely available on the Hungarian Chamber’s

    website;

    ? Quality assurance takes the form of peer review by members with at least six years of

    experience;

    ? There are clear sanctions for poor quality audits and non-compliance with review teams; ? The Chamber has needed to convince members that reviews are in its own interest; ? Discussion highlighted point that should be little difference between quality assurance

    processes in public and private sector;

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    UMMARY PREPARED BY GARETH CALLER (UK NAO) S

    Quality Assurance System in the State Audit Office of Hungary

    ? The SAO of Hungary researched systems developed by other SAIs, ISO standards and

    systems used by private sector accountancy firms when developing its QA system

    ? The aim is to produce a total quality management system; the current system covers audit

    and HR (but not other support services)

    ? The Quality Assurance Unit is under the direct supervision of the President of the SAO

    ? There was a discussion about letting clients see audit work as a driver for quality;

    conclusion that they should see report and have ability to comment but not working papers

    ? Discussion about how to win staff over to new quality systems some complain makes

    more work

Audit Quality Management System in the Russian Federation

    ? Quality Assurance is now seen as a high priority for the Russian Federation Accounts

    Chamber

    ? The role of the Chamber is developing and the influence of the Chamber is increasing all

    the time

    ? The Accounts Chamber has the following stages of the forming quality management

    system: quality planning, quality assurance, quality control, quality improvement.

    ? Some elements of control management are in place, but this is not yet systematic

    ? At present the organization of quality control in the Accounts Chamber has the following

    structure:

    o Chairman of the Accounts Chamber, Directors of audit units conduct expert

    meetings before the Board meetings (every week) where results and quality of

    conducted audits are discussed

    o Auditors of the Accounts Chamber (Members of Board) as Heads of corresponding

    Audit departments discuss results and quality of conducted audits before presenting

    reports to the Board

    ? Russian law requires formal retraining for all audit staff at least once every five years

    ? The Chamber sees quality control and quality assurance equally important in the audit

    quality management system.

    ? The Chamber plans to use quality assurance questionnaires that can be completed by any

    appropriate person external to the audit team

    ? Query on how quality assurance criteria should be set; suggestions included:

    o Timeliness of reports

    o Usefulness of reports

    o Whether recommendations are accepted by clients

    o Feedback from stakeholders seems very important to assess the audit quality:

    (audited organizations, superior bodies of audited organizations and ministries; the

    Parliament and its committees, media and general public; scientific institutions)

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    UMMARY PREPARED BY GARETH CALLER (UK NAO) S

    Adding Quality to the Audit Process A Practical Example

    ? Run through a practical example of how the EU Court of Audit added quality to a specific

    process to draw out lessons of how it might be more widely applicable ? The Commission receives about 150 evaluation reports from external contractors each

    year and about 30 Performance Audit reports

    ? The methodology is a process to provide quality assurance for Evaluations. However, the

    lessons are as useful for Performance Audits

    ? As evaluations can look very different a standard checklist is not appropriate ? Need to ensure that stakeholders understand the limitations of audit ? Use a mixture of stick, carrot and education to get EU Divisions to co-operate with audit

    teams

    ? Vital to make the link between audit work and decision making clear to auditees to

    increase chance of co-operation

    ? Feedback loop seen as very important to improve audit quality

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    UMMARY PREPARED BY GARETH CALLER (UK NAO) S

    DAY 2

Performance Audit Quality Assurance Model - Sweden

    ? There is a Quality Assurance Department which aims to ensure overall quality

    ? Performance audits have three key stages; planning, half-way review and when the draft

    goes to the auditee

    ? The quality assurance reviewer gives a written opinion at the end of each stage

    ? Each review is discussion-based as well as document based

    ? There are mandatory quality assurance criteria at each stage but the key aim is to provide

    advice on quality matters rather than to hold the audit team to account

    ? Quality assurance reviewers are experienced audit staff given extra training in making

    constructive suggestions

    ? There is an Information and Communication department which aims to ensure that key

    messages are picked up by the media

Quality Control for Financial Audit UK

    ? Having high quality staff is key for delivering quality audit work

    ? Have contract with private sector accountancy firms to buy-in expertise; also allows SAI

    to benchmark performance

    ? In the UK Quality Control is based on the IFAC standards and includes quality assurance

    ? Internal procedures include:

    o Mandatory audit procedures directly linked to the relevant IFAC standards

    o Detailed review by Audit Manager must be evidenced for every procedure, but

    level of review depends on professional judgement

    o High level review by Audit Director also must be evidenced and focuses on key

    risks to giving incorrect audit opinion

    o Standards Assurance Review for ‘high risk’ audits (either politically sensitive or

    technically complex)

    o Cold review of completed audits

    ? Line auditors conduct cold reviews but this can make staffing difficult

    ? Effort put into selling procedures to staff so they won’t complain about extra work too much

    ? External procedures include:

    o Review by Quality Assurance Directorate of ICAEW

    o Client Feedback Questionnaires

    ? External procedures mainly used to publicly demonstrate commitment to audit quality

    rather than really improving audit quality

    ? Results of quality assurance procedures communicated to auditors through changes to

    office policy and key lessons included in future training

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    UMMARY PREPARED BY GARETH CALLER (UK NAO) S

    Financial Audit Experiences in Quality Control - Estonia

    ? Strategic goal is to comply with IFAC standards

    ? Five heads of department who sign audit reports and are personally responsible for audit

    quality

    ? Supporting services with responsibility to harmonise audit methodology ? Quality management focussed round professional competence (which is defined as a

    mixture of knowledge and experience)

    ? The methodology team reviews audit plans to confirm that they are of an appropriate

    standard

    ? The Estonian SAI uses documentation software to make it easier to evidence review

    there was a discussion about the usefulness of software such as Teammate ? It has proved impossible to learn all the IFAC standards in a short time, but the SAI is

    getting better all the time.

    ? There was a discussion about who should set audit plans and about to what extent

    standardised audit procedures are beneficial

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