Watchdog calls for 'significant improvements' in Mazars' audit
Audit Inspection Unit's review of Mazars' work flags up a series of issues, including a lack of evidence to support going concern assessments
SIGNIFICANT IMPROVEMENTS are required following an audit review of Mazars‘ work by accounting’s watchdog.
In a series of check-ups of firms’ work by the Audit Inspection Unit (AIU), Mazars was found to have an audit that required significant improvements. Of the other three audits reviewed by the AIU, two were classed as ‘good with limited improvements required’, while one was ‘acceptable overall with improvements required’.
A series of issues were drawn to the attention of Mazars – in what was the AIU’s first ‘full scope’ review of the firm – these included:
Audit evidence: Three of the four audits required further evidence to support the audit;
Going concern: Weaknesses were found to support the going concern assessment in three of the four audits. In two cases, a formal going concern assessment was not obtained from the audited entity;
Assessment of experts’ independence and competence: There was insufficient consideration of the ‘appropriateness’ of using the work of experts in three of four audits;
Substantive analytical procedures: There were weaknesses in the procedures for analysing certain account balances, across three of the four audits;
Procedures in response to the risk of fraud: In two instances there was a lack of consideration for the potential of management override of controls, and insufficient or no testing of year end journals.
Other findings from the AIU include weaknesses or omissions in Mazars auditors’ communications with audit committees. There was also insufficient consideration of the independence threats arising from providing non-audit services.
“Mazars is pleased to submit its response to the Audit Inspection Unit (“AIU”) Public Report on the 2011/12 inspection of this firm,” stated the firm in its response to the AIU.
“We recognise that independent audit inspection by the AIU plays a key role in assuring audit quality in the UK and welcomed this inspection, our first full scope review from the AIU.
Resources & Whitepapers
Accounting Software The power of customisation in accounting systems
“As you have acknowledged, we are committed to continuous improvement in audit quality and that commitment is demonstrated by the actions already taken or in progress.
“We will continue to work constructively with the AIU to meet our shared audit quality objectives.”
The AIU’s latest round of audit insepctions also included reviews of Baker Tilly; PKF; and Crowe Clark Whitehill.