Welcome to Query Of The Week
Welcome to this week’s Query Of The Week. Each week our technical team respond to a huge number of client queries and in this segment, we share with you the most common questions that keep coming up time and time again.
In this week’s Query Of The Week, Neill Doran walks us through 5 key items which are often missing in an audit file. These can be the cause of many breaches at the outset of the file review process.
Common File Errors under ISAs
If this Query Of The Week was of interest to you, you will also be interested in our Common File Errors under ISAs online CPD Course.
Full details for this online course can be found here.
|CPD Allocation||1 Hour|
|Fee||€25 (or 1 CPD Club point)|
|Presenter||Garret Wynne – OmniPro|
Query Of The Week – Video Transcript
(Please note that this is a direct unedited transcript of the spoken word as recorded on the video)
Each week our technical team respond to a massive number of client queries, and in this segment, we share with you the most common questions that keep coming up time and time again.
In this week’s Query Of The Week, Neill Doran discusses 5 significant pitfalls of Audit files
This is not, I suppose, necessarily a query, but more a reflection of recent file reviews and what was thrown up as the major pitfalls that I’ve seen while performing core file and half file reviews.
This week, I’m going to talk to you about the five essential items that are most often missing or incomplete from an Audit file review, resulting in many breaches at the outset of the file review process. This then results in a likely failure of the Audit file.
1. We start with the Letter of Engagement. Quite often it is not on the file, or if it is, it has not been signed by those in governance. Then it could be that the Letter of Engagement is not in respect of the current year but actually refers to the prior year. Furthermore, it is not up to date for proper terms of engagement such as Anti-Money Laundering, GDPR, the recent, most up to date Companies Act; sometimes I see old Companies Acts references. Is the most applicable current financial reporting framework used? Is it FRS 102, 105, Section 1A? Generic descriptions of controls without evidence of a review in the current year are not sufficient.
2. The next key consideration in an Audit file review outside the Letter of Engagement is the ethical considerations for non-audit services. Quite often, these are not appropriately documented. The order in the provision of a non-audit service does not consider the implications of that service, and accordingly does not document appropriately the safeguards that should be in place for that service being provided.
3. The third and next point about file reviews is the Letter of Representation. The Letter of Representation, similar to the Letter of Engagement, may not be on file or has not been signed by those in governance of the entity. Furthermore, there’s often a significant time-lag between the date of signing the Letter of Representation and the actual signing of the financial statements. Or sometimes the Letter of Representation is signed after the fact of the signing of the financial statements. Thereby, it’s not relevant.
4. We then come to the financial statements and the abridged financial statements. The file quite often does not include a full adopted set of accounts which are required by the directors and signed off subsequent to the auditor’s report, by the auditor.
5. And then finally, there is the abridged set of accounts. The file does not contain a copy of the signed abridged accounts for filing purposes and the auditor report abridged is not signed by the auditor or by the directors.
Preparation is key to a successful file review
As I mentioned at the beginning of this post, this is not necessarily a query, but rather a more formative exercise. These are the five key points that I have noticed in the context of a file that fails when providing core file and half file reviews.
If you have found this helpful, then you might consider attending our upcoming webinar in relation to common file review errors and how you might go about mitigating those issues. Also, if you have an in-audit question, I would encourage you to come to our Outreach Hub and send us your questions and queries, and we will answer and respond to them as best as we possibly can.
I’m Neill Doran of OmniPro Practice Support and thank you!