The Australian Securities & Investments Commission (ASIC) today released its fourth audit inspection program public report summarising the results of audit firm inspections completed between 1 January 2008 and 30 June 2009.
ASIC Commissioner, Michael Dwyer, said Australia’s audit regime compares well internationally. Further, it was pleasing to see that Australian firms have taken steps since our last report to make further enhancements and refinements to their independence and audit quality systems and processes.
ASIC reviewed audit engagement files across 19 firms, focusing on the substance of the auditor's work and whether sufficient and appropriate audit evidence was documented to support the conclusions reached in relation to key audit judgements. ASIC's inspection identified a number of cases requiring improvements in audit quality in audit areas related to the global financial crisis, such as the appropriate use of experts in testing asset valuations. Additionally, the adequacy of audit evidence and documentation for significant audit judgement areas continues to be an area of focus for ASIC.
'Different entities have been affected in different ways by the current economic conditions. It is important that auditors continue to focus on areas such as going concern, impairment of assets, and determination of fair values of assets', Mr Dwyer said.
Mr Dwyer also reminded auditors to adopt a high level of professional scepticism when reviewing significant audit judgement areas in the current economic climate.
ASIC has reported and discussed its findings separately with each of the firms.
'ASIC will continue to assess the overall performance of the auditing profession as we complete our inspection activities for the current year', Mr Dwyer said.
Future inspections will continue to involve firms that audit entities of greater public interest. We will continue to focus on how firms are complying with auditing standards and other requirements, paying particular attention to those auditing standards impacted more by the effects of the global financial crisis and those that were not appropriately applied in previous years.
Background
The objective of ASIC’s audit inspection programme is to promote high quality external audits of financial reports of listed and other public interest entities in Australia so that users can have greater confidence in financial reports. ASIC publishes its public audit inspection reports periodically to better inform all firms, the investing public, companies, audit committees and other interested stakeholders of findings and areas of focus.