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06 July 2015 - Communiqué: Application impact of Amended Qualifying Small Enterprise (QSE) scorecard and Exempt Micro Enterprise (EME) requirements on the South African Standard on Assurance Engagements (SASAE) 3502 View More
24 Jun 2015 - Communiqué: Revised Guide for Registered Auditors: Reportable Irregularities in terms of the Auditing Profession Act View More
18 Jun 2015 - Visit by the IAASB Leadership and Resources for the Implementation of the New and Revised Auditor Reporting Standards View More
17 Jun 2015 - The IRBA Board adopts the IAASB's new and revised Auditor Reporting Standards and related conforming amendments View More
08 Jun 2015 - René Kenosi Appointed First Black Female Chairman of The Independent Regulatory Board For Auditors View More
04 Jun 2015 - Inspection Fees Payable to the IRBA with effect from 01 April 2015 View More
28 May 2015 - Inspections Findings Newsflash 2 of 2015 View More
27 May 2015 - IRBA Information Sessions 2015 View More
13 May 2015 - IESBA's Proposed Standard On Responding To Non-Compliance With Laws And Regulations (NoCLAR) View More
31 Mar 2015 - Communiqué: IRBA Language Policy 2015 View More
 
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Inspection Results

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Inspection Results


For many years the results from engagement inspections (file reviews) have been based on re-review criteria. Re-review criteria were used to progressively improve the content and quality of audit working papers as prepared by practitioners.

 

In the first review cycle, documented tests of the balance sheet and balance sheet line items formed the base for considering whether adequate working papers existed to justify the audit opinion, while the criteria for the second review cycle was increased to include tests of transactions, planning and completion. The third review cycle introduced the concept of sufficient, appropriate and adequate working papers and 15 items were pre-determined to measure the quality of audit working papers.

 

The introduction of the firm inspection has resulted in examining audit working papers and other documentation against the full scope of the auditing standards and as a result the use of pre-determined re-review criteria has become obsolete.

 

The Inspections Committee has therefore decided that from the middle of 2010 all engagement and firm inspections will be based on the full scope of the Auditing, Accounting and Quality Control Standards, effective at the time of inspections.

 

The result is that all issues of insufficient, inadequate or inappropriate documentation found in audit working papers by the inspectors of the IRBA are to be judged against those standards and submitted to the Inspection Committee with the appropriate recommendation regarding the action to be taken to correct such shortcomings.

 

The results of inspections (firm and engagement) are now evaluated as follows:

 

Satisfactory


  • 0. No issues
  • 1. Documentation shortcomings, but risk of inappropriate audit opinion is unlikely.

 

Not Satisfactory


  • 2. Significant issues of non or inadequate documentation.
  • 3. Significant issues of non or inadequate documentation and risk of an inappropriate audit opinion is likely.
  • 4. Fundamental non or inadequate documentation and an inappropriate audit opinion has probably been expressed. The firm has taken appropriate corrective action.

 

Referral to the investigating committee


  • 5.
    • Fundamental non or inadequate documentation and an inappropriate audit opinion has probably been expressed. No corrective action taken by the firm or impossible to be taken by the firm; or
    • Total disregard for Standards (Auditing and Accounting); or
    • Public placed at risk; or
    • No improvements on follow-up visits.

 

The recommendation by the inspectors to the Inspection Committee will now be one of the above with an indication of the steps to be taken by the Inspections Department to ensure corrective action is taken by the firms and the individual practitioners, whichever is applicable.

 

The recommendation can vary from:

 

  • a written undertaking to take corrective action; or
  • follow-up visits where we re-inspect an entire audit file (or policies and procedures of the firm) or elements thereof; or
  • follow-up visits where we review the steps the firm has taken to ensure that issues have been properly addressed and, if necessary, have corrected the inappropriate audit opinion.

 

These follow-up visits can be scheduled immediately or within the 12 months following the original inspection.

 

Imre Nagy
Director: Inspections

 

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