Conal Kennedy, Head of Practice Consulting, ICAI

January 2009

Procedures for Quality Audit 2009Procedures for Quality Audit 2009

Objectives of this presentation

• Present the PQAs• Paperless audit

The PQAs

• Quality Audits • Planning• Fieldwork• Completion

What’s new in the PQAs

• Fully integrated with RAP • Shorter planning section• Emphasis on risk • Extended highlights memorandum• Optional add-ons

Objective of an audit

• To enable auditors to give an opinion on financial statements…

to provide reasonable assurance that the financial statements give a true and fair view and have been prepared in accordance with law and accounting standards.

An Audit

• Getting it right on a budget.• Protect your client and protect yourself• Focus your work

Checklists

• Avoid checklist driven auditing• Checklist – endeavours to be comprehensive• Equal prominence to all tests• Comfort zone auditing?• Risk based auditing

Planning – Key Questions

• What do we know about the client?• What are the numbers telling us?• How does this affect our audit?• Links

Planning - Key Questions

• What is expected of the auditor?• Who is my client? • What is my overall approach? • What work will I do?• How will I perform and record the audit work?• When will I do it?• What can I cut down?• What can I leave out?

Understanding your client

Make a list of the top five of each of the following

• Suppliers• Customers• Staff members• Products• Competitors

Is all this documented on file?

PQAs and Risk

• Previous version of PQAs• Planning – series of standalone spreadsheets

PQAs and Risk

• Link between knowledge of client and risk• Link between the financial statements and risk• Business risk and audit risk• You should list at least five risks• Why five?• Link between risks and audit work• What work can I cut down or leave out?

PQAs on Excel

• Advantages of Excel– Flexible– Can be linked to supporting schedules

PQAs on Excel

• Disadvantages of Excel–Electronic signatures–Deleted tests can vanish–Roll forward issues–Not fully paperless–Not a good word processor–Third party documents to go on file

Fully paperless PQAs

• Populate lead schedules from trial balance • Version control• Amend tests• Link supporting documentation to the file• Control over suppressed tests

PQAs – other features

• Practical work programmes for each section • Aide memoir to address disclosure omissions• Client work programme• Call over programme• Audit exemption questionnaire• Expanded Significant Matters Memorandum• Risks revisited in Significant Matters Memorandum

The Disclosures Aide Memoir

• An Aide Memoir, not a checklist • Useable• Not comprehensive• References to main disclosure checklists

Questions?

Thank you for your attention