THE SIX LARGEST GLOBAL NETWORK AUDITORS must make measurable improvements to their audit quality by 2019, according to the International Forum of Independent Audit Regulators (IFIAR).
“Persistent levels of deficiencies” in public company audits were reported by members in its annual inspections findings survey.
Audits undertaken by BDO International, Deloitte Touche Tohmatsu, EY Global, Grant Thornton International, KPMG International Cooperative, and PricewaterhouseCoopers International were examined. Approximately 43% of the inspected audits of listed public interest entities (PIEs) had at least one inspection finding during the survey period.
Overall, the survey found the highest number of audit inspection deficiencies in the areas of internal control testing, fair value measurement, risk assessment, and revenue recognition – topics among the core building blocks of audited financial statements.
IFIAR head and chairwoman Janine van Diggelen said: “While this is a four percentage point drop in deficient audits over last year, IFIAR is not yet satisfied that enough has been done by the audit profession to understand and address shortfalls in audit quality. The outcomes continue to show a lack of consistency in the execution of high quality audits and highlight concerns over the robustness of the firms’ internal quality management systems.”
IFIAR and the six largest network firms have now agreed on an initiative to improve audit quality globally. The goal is to reduce the number of deficient audits reported by our members in the survey. To provide a means to measure progress, for the first time IFIAR’s working group has set a measurable target for the reduction of audits with findings: a reduction of at least 25% in the next four years in audits with at least one finding as reported by the members of this working group.