QUALITY CONTROL FOR AUDIT WORK
Objective - To establish standards on quality control:
a. Policies and procedures of an audit firm for audit work generally, and
b. Procedures regarding the work delegated to assistants on an individual audit.
Meaning of certain terms ¬
a. Auditor -' The person with final responsibility for the audit.
b. Audit firm - A proprietary or a partnership firm providing audit service.
c. Personnel - All partners and professional staff engaged in the audit practiced of the firm.
d. Assistants - Personnel involved in an audit other than auditor.
Implementation of Quality Control - The audit firm should implement quality control policies to ensure that all audits are conducted in accordance with Auditing and Assurance Standard (AASs).
Essential factors for incorporating quality control in audit work - .
a. Professional Requirements - Adherence to basic principles such as independence, integrity, objectivity, confidentiality, etc.
b. Skills and competence - Audit personnel should have required degree of skill and competence.
c. Assignment - Audit work should be assigned only to competent personnel.
d. Delegation - There is to be sufficient direction, supervision and review of work at all levels.
e. Consultation - Consultancy within and outside the firm with experts.
f. Acceptance and Retention of clients - Evaluation of prospective client and review of existing client should be done.
g. Monitoring - Continued adequacy and effectiveness of quality control policies should be monitored.
The firm's quality control policy should be effectively communicated to its personnel.
Quality control for Individual Audits - The quality control policies applicable to firm should be implemented for individual audits to the extent applicable. The audit work should be delegated to assistants with professional competence and should be appropriately directed and supervised. Audit assistants should be informed of the nature of business, accounting policies, possible accounting or auditing problems. They should be explained of what is expected of them and how to achieve it. They should be informed about the importance of audit programme, time budgets and overall audit plan.
Supervision - Persons with supervisory responsibilities should ¬
a. Monitor the progress of audit;
b. Become informed of and address significant accounting and auditing questions raised during the audit;
c. Resolve the differences of professional judgment and consider the level of consultation as appropriate.
Review - Review of work of audit staff should be carried out to ensure that the:
a. Work has been performed as per the audit programme.
b. Work performed has been adequately documented.
c. All significant matters have been resolved or are reflected in audit conclusions.
d. Objectives of the audit procedures have been achieved, and
e. Conclusions expressed are consistent with the work performed.
Matters to be reviewed On a timely basis
a. Overall audit plan and the audit programme.
b. Assessment of inherent and control risks.
c. Changes to be made to audit plan and programme.
d. Documentation of the audit evidence obtained from substantive procedures and the conclusions drawn there from.
e. Any amendment to the financial statement arising out -of the auditor's examination, and the auditor's proposed observations / report.
Persons not connected with audit may be requested to perform additional procedures before issuing the auditor's report.
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