Audit firms are failing to document their judgments well enough, the regulator has said.
Accountancy Age, 27 Jun 2007
The Audit Inspection Unit issued what is expected to be its last general report on firms yesterday, reiterating concerns about the level of documentation.
The AIU questioned the quality of documentation on file, which supported the judgments made across all nine firms. The body said that while it had given audit teams the benefit of the doubt, it had made clear that the deficiencies need to be rectified.
The AIU also noted one instance in which a partner left a firm to join ‘a major listed audit client’ as finance director. Though the body did not name the person, Barclays’ new FD Chris Lucas is understood to be the individual concerned.
Lucas had been the engagement partner on the Barclays audit at PwC, but left a two year gap between stepping down and going to the bank, as is required under conflict of interest rules. Despite the gap, the AIU said it was not clear if the partner remained in the firm’s ‘chain of command’.
The firm explained why the partner was not in the ‘chain of command’, with the AIU concluding that firms needed to clarify the ‘chain of command’ in a firm.
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