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The survey asked Members to report findings from their inspections of audit engagements where Members had noted deficiencies in specific areas; it did not seek information regarding instances where auditors had met the required professional standards. Members reported findings that were significant matters where the auditor did not perform sufficient work to meet the applicable auditing standards and other related requirements.
In the last several years, Member updates at the IFIAR plenary meetings on the results of their inspections of audit firms have included a number of common inspection findings across different jurisdictions. Certain inspection findings also have been identified by Members repeatedly from year to year. The survey focused primarily on Members’ inspections of audit firms that are members of the six largest international audit firm networks and includes issues identified by:
The survey identifies common audit findings among Members in a number of areas. For example, the survey results indicate that the largest number of inspection findings in audits of public companies occurred in the following areas: fair value measurements; internal control testing; and engagement quality control reviews.
Additionally, inspections of audits of major financial institutions revealed that the largest number of common inspection findings occurred in the following areas: internal control testing; valuation of investments and securities; and audit of allowance for loan losses and loan impairments.
The survey results also include four areas that have been discussed by IFIAR with representatives from the six largest audit firm networks since 2010: professional scepticism, group audits, revenue recognition, and the role of the engagement quality control reviewer.
IFIAR Members will continue to inspect the public company audit engagements, including major financial institutions, and work closely with the audit firms in their jurisdictions to improve audit quality. Members also will continue to follow-up with the audit firms to evaluate and monitor the audit firms’ remedial actions in response to their respective inspection findings. In addition, IFIAR will continue to work with the leadership of the six largest international audit firm networks to discuss inspection findings and the firms’ strategies and actions to improve audit quality.
The information in this report may be of use to audit firms, audit regulators, other regulators, policy makers and standard-setters in their efforts to improve audit quality. It also may be of use to investors and audit committees as an indicator of the current status of inspections of auditors of public companies, including financial institutions in jurisdictions around the world.
Summary Report of Inspection Findings