Baker Tilly criticised over deficient audit work

Baker Tilly criticised over deficient audit work

FRC censures Baker Tilly for its reluctance to accept criticisms of audits in need of significant improvement

TOP TEN accountancy firm Baker Tilly has been told to review its audit methodology in light of continuing deficiencies in the quality of its audit work discovered as part of an inspection by the profession’s watchdog.

Baker Tilly was also criticised by the FRC for its reluctance to accept recommendations made by the regulator, which found half of the audits it inspected required significant improvements and that progress in improving the quality of its work has been slower than expected.

The FRC found that of the six Baker Tilly audits it reviewed as part of its Audit Quality Inspection Report, three audits required significant improvements; one required some improvement, while two were performed to a good standard.

“We are concerned that, despite additional correspondence with the firm on the issues arising, the firm may not have accepted certain of our findings that led us to conclude that significant improvements are required,” the FRC said.

According to the FRC, areas in need of improvement include the audit of impairments, the audit of IT controls, the consideration given to financial statement risk, the reporting of audit differences arising on the audit of the valuation of interest rate derivatives and the performance of substantive analytical review procedures.

As part of its findings the FRC told the firm to review its audit methodology in light of continued deficiencies in its analytical review process and to take more effective action in response to “internal and external audit quality monitoring findings”.

“The firm’s rate of progress in achieving improvements in audit quality, particularly in relation to substantive analytical review and the audit of IT systems, has been slower the we expected,” the FRC said.

In response to the findings Baker Tilly said: “We are committed to achieving the highest standards of audit quality and we continue to take whatever actions are necessary to do this.

“We welcome the Audit Quality Review Team’s report and we are already addressing all of the findings that will lead to an improvement in audit quality.”

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