Page 18 - Inspection Report 2018

COmmON FINdINGS FOr mAJOr ANd OTHEr AudIT FIrmS

The common findings observed from the AOB’s inspections of the Major and Other Audit Firms in 2018 are
listed in Table 1 below:

Table 1
Common findings identified by the AOB during the 2018 inspections

Common findings Key concerns / risks AOB reminders
Leadership Responsibilities for
Quality within the Firm
Certain audit firms outsourced the Audit quality would be compromised Audit firms should only undertake
function of EQCR partner. if the audit work were carried out by an audit engagement when they
audit engagement team members have sufficient internal resources and
These firms had also outsourced the who are not sufficiently competent. capabilities to execute a quality audit.
audit work to audit staff from non-
AOB registered firms. Further, an audit firm might not be Effective from 16 August 2018, the
able to exercise effective oversight New Criteria for Registration with
The following shortcomings were and governance over outsourced the AOB requires the functions of the
identified by the AOB: audit partners. EQCR partner to be carried out by
AOB-registered partners of the same
• The affected audit firms did audit firm appointed as the auditor of
not evaluate the competence the PIE or schedule fund.
of the outsourced EQCR
partners and audit staff that For audit firms and individual auditors
were contracted to perform who are registered with the AOB
audit work for their PIE audit as at 16 August 2018, they would
clients; and be given until 1 January 2020 to
ensure compliance with the new
• Some of the outsourced EQCR requirements.
partners and audit staff did not
attend training on accounting
and auditing standards which
were relevant for the audit of a
PIE within the last one or two
years.
Relevant Ethical Requirements

Based on our selection of audit The failure to monitor audit Audit engagement partners are
engagements for inspection, it was engagement team members’ ultimately responsible for ensuring
noted that certain engagement independence declarations posed the that the audit engagement team is
team members did not confirm risk that independence issues, if any, independent of the audit client.
their independence prior to may not be detected and addressed in
their involvement in the audit a timely manner. They must therefore give due
engagements. attention to ensure that the
independence declarations by the
audit engagement team members are
timely and complete.

Source: AOB

AUDIT OVERSIGHT BOARD
16 ANNUAL INSPECTION REPORT 2018

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