After reviewing 454 key audit areas across 107 audit files at firms of differing sizes, ASIC identified the sufficiency and appropriateness of audit evidence obtained by the auditor, the level of professional scepticism exercised by auditors, and ensuring appropriate reliance on the work of experts and other auditors as key areas of auditing in need of improvement.
Amir Ghandar policy advisor – audit and assurance at CPA Australia welcomed the regulator's feedback but said more timely reporting is needed.
“More timely reporting would improve the relevance and value of ASIC’s reporting – note the current report draws back to 2012 and as a result it is unclear whether efforts made to address the previous report will be evident.”
“Audit quality is a critical component in effective capital markets and the focus needs to be on collaboration and constantly improving.”
“The wheels of regulators, the audit profession and other stakeholders need to work together toward improving confidence across the markets,” he said.
“CPA Australia is engaged in a range of activities toward better audit quality, including groundbreaking work on educating and understanding professional scepticism – one of ASIC’s auditor focus areas,” he concluded.
Rob Ward, head of Leadership and Advocacy at the Institute of Chartered Accountants Australia (ICAA) said ASIC’s findings demonstrate the importance of audit firms continuing to focus on their processes to address the root causes of inconsistencies in how audits are carried out.
Mr Ward said the ICAA has itself conducted research into the audit practices of a large number of firms to identify the main drivers of audit quality.
“The ‘tone at the top’ is an important driver of audit quality and our findings show that while tone is strong, improvements are needed in getting messages across to less senior staff,” he said.
“The Institute will continue to work with firms to help in the ongoing enhancement of audit quality,” said Mr Ward.