Quality issues in audits – ASIC’s recent inspection findings

ASIC’s recent inspections of financial auditors of listed companies has been released.

ASIC Commissioner John Price stated that ‘Auditors are gatekeepers that play a critical role in ensuring Australian investors can be confident and informed and based on our findings there is a continued need for audit firms to improve audit quality and the consistency of audit execution’.

ASIC surveillance focuses on higher risk audits,and ASIC findings do not necessarily mean financial reports audited were materially misstated. Rather, in ASIC’s view the auditor did not have a sufficient basis to support their opinion on the financial report.

ASIC inspections suggest audit firms must continue to improve in the following three areas:

  • the sufficiency and appropriateness of audit evidence obtained by the auditor
  • the level of auditors’ professional scepticism, and
  • appropriate use of the work of experts and other auditors.

Many of ASIC’s findings continue to be relevant for public sector auditors – both financial and performance auditors are encouraged to review the findings for applicability in improving their own audit practice.

Available at: ASIC’s inspection program report for 2014-15