STUDENTS
Current issues in auditing: part 4 Students must be familiar with professional practice issues and pronouncements as part of their understanding of professional auditing.
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IES 8 Professional Competence for Engagement Partners
IES 8 Professional Competence for Engagement Partners responsible for statutory audits of financial statements (revised) has applied since July 2016. This responds to the risk that as engagement partner work becomes more specialised, it is possible that they are not up to date in all aspects of current technical developments. As their practice administrative duties increase, it is also tempting to delegate the specialist CPD to other members of the firm. This then renders their knowledge insufficient to support the complex evaluation of audit evidence to come to an appropriate audit opinion.
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he International Federation of Accountants (IFAC) framework ‘A framework for audit quality: Key elements that create an environment for audit quality’ (bit.ly/2Z3JK6O) provides a comprehensive overview of the factors driving audit quality at an engagement, firm and national level. It reiterates much of the previous guidance but contextualises the ideas within the debate around the increasing focus on public interest. The problems in ensuring audit quality in audit firms are clearly not easy to resolve as the regulatory review into audit firms in the UK routinely highlight areas of weakness. The spate of recent high profile audit scandals in public interest entities would support the idea that these problems result in poor quality in practice. It is therefore vital that students understand how audit quality is promoted and safeguarded in audit firms. This is an area that is frequently examined in this paper. In the UK, there is evidence that audit firm quality procedures are not as robust as the regulator might prefer. There is also evidence that the audit firms have a tendency to underestimate problems with their own work. This is not entirely unexpected, as subconscious bias will tend to mean that auditors who work within a specific audit culture will not be able to appreciate its weaknesses. It is very difficult for an audit firm to be objective about its own quality. However, there is an increased focus from IFAC and national regulators on firm audit quality policies and the monitoring of such.
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