Global audits found to be deficient in critical areas

Global audits found to be deficient in critical areas

Audits conducted by affiliates of six largest firms persistently deficient, survey of 30 regulators finds

ACCOUNTING FIRMS around the world are producing audits that are deficient in a number of critical areas, according to a group of 30 international regulators.

The findings of the International Forum of Independent Audit Regulators (IFIAR), released last week from a survey conducted in 2013, indicated that audits were persistently deficient and that there “is a basis for ongoing concerns with audit quality”.

Based on inspection reports issued during the members’ most recent annual reporting periods that ended by July 2013, the survey found deficiencies in the auditing of fair value measurements; internal control testing; and procedures to assess the adequacy of financial statement presentation and disclosures.

The leading areas of deficiency in audits of systemically important financial institutions, including global systemically important banks, related to auditing of allowance for loan losses and loan impairments; internal control testing; and auditing of the valuation of investments and securities.

Audit firms‘ own quality control systems had the highest number of inspection findings in the areas of engagement performance; human resources; and independence and ethics requirements.

‘Severity of deficiencies’

“The high rate and severity of inspection deficiencies in critical aspects of the audit, and at some of the world’s largest and systemically important financial institutions, is a wake-up call to firms and regulators alike,” said Lewis Ferguson, IFIAR chair and board member of the PCAOB.

The findings discussed in the survey are mainly from inspections of audit firms affiliated with the six largest international audit firm networks, BDO International, Deloitte Touche Tohmatsu, Ernst & Young Global, Grant Thornton International, KPMG International Cooperative, and PricewaterhouseCoopers International.

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

Professional Services Why Professional Services Firms Should Ditch Folders and Embrace Metadata

2y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

2y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine

Accounting Firms Turn Accounts Payable into a value-engine

2y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021

Making Tax Digital Digital Links: A guide to MTD in 2021

2y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource