Page 39 - Inspection Report 2018

root cause anaLysis performed

By the major audit firms

In order to gain a better understanding of the underlying causes to audit findings, the Major Audit Firms
performed root cause analysis on signficant findings arising from the firm’s internal quality reviews and the
AOB inspection.

Findings were commonly attributed by the Major Audit Firms to the following root causes:

Inadequate Supervision and Review
• Supervision and review by the audit partners and the managerial level staff were
not sufficiently robust and in some instances, were untimely

Knowledge Gap
• Certain audit engagement team members lacked industry or technical
knowledge

Inadequate Resource Allocation

• Insufficient audit staff being allocated to the audit engagement
• Mismatch between skills and experience of the audit engagement
team members with the requirements of the audit engagement

Lack of Documentation Discipline
• Lack of rigor in the documentation of the audit procedures performed
and the results thereafter. In the absence of proper documentation, it was
difficult for the audit engagement team to provide evidence that relevant
audit procedures have been carried out during the audit

Time Pressure
• Some audit clients did not provide their deliverables on time
• Tight reporting deadlines imposed by the audit clients. This situation was worsened
when there were issues with the quality of deliverables from their audit clients

The AOB encourages all audit firms to continue to assess the underlying cause
to inspection findings as part of their efforts to reduce recurring findings and
enhance audit quality. Audit firms should ensure that the root cause analyses
are carried out with sufficient depth to ensure measures taken for quality
improvements are effective and sustainable.

AUDIT OVERSIGHT BOARD
ANNUAL INSPECTION REPORT 2018 37

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