PKF HAS BEEN urged by the Financial Reporting Council's audit inspector to increase the attention it pays to the audit of impairments.
The FRC's Audit Inspection Unit's bi-annual review of audit work undertaken by PKF found that of the seven audits reviewed, five were performed to a good standard and two were performed adequately; a marked improvement on the previous report which found two audit contracts in need of significant improvements.
However, the AIU found issues relating the sufficiency of audit evidence used for key judgements over the impairment of deferred costs and goodwill in a number of areas in four of the audits reviewed.
In addition, insufficient or no audit work was found to have been performed in respect of certain disclosures concerning related party transactions, long term contracts, financial instruments and operating leases.
In two audits, insufficient consideration was given to requesting and obtaining third party confirmations of cash balances either held at overseas banks, from whom the audit team considered that a response might not be received, or held in an escrow account, the AIU said.
In response to the report PKF said: "We operate to high standards and we commit substantial resources to ensuring that we continue to do so. We believe that this report reflects our commitment in this respect.
"Nevertheless, we are not complacent and we continue to develop our processes around quality work."
The AIU's latest round of audit inspections also included reviews of Baker Tilly, Mazars and Crowe Clark Whitehill.
Good article that points to the need for more efficient, more effective confirmation processes. Many audit firms are turning to electronic audit confirmations due to improved response rates, faster turnaround times, and less costly overall than chasing mailed paper confirmations.
Posted by: Brian Fox, 11 May 2012 | 17:51
You may also like
If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.
In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.