2. Audit file reviews ordered by ACCA

3. Audit file review orders Key features Basis of ACCA’s audit file assessment Guidance for firms (and “hot” reviewers) Examples of “hot” review deficiencies Audit file reviews ordered by ACCA: contents

4. Ordered by Admissions and Licensing Committee or Regulatory Assessors Ordered after unsatisfactory outcome to a monitoring visit Principal objective – provides safeguard on audit reports issued Secondary objective – provides training to firm on ISA compliance Audit file review orders

5. Committee or assessor decides number of files to be reviewed Practice Monitoring staff decide which files to be reviewed All reviews normally “hot” Firm chooses reviewer from ACCA’s list of Approved Training Companies Audit file review orders

6. Firm not required to submit reviewer’s reports to ACCA Instead, ACCA conducts early re-visit At re-visit ACCA reviews audits – some subject to “hot” review, some not Quality of “hot” review assessed by comparison with ACCA’s review Audit file reviews: key features

7. Based on concept of “reasonable assurance” (ISA 200) ACCA identifies all deficiencies and considers each individually ACCA considers risk of material misstatement remaining undetected Therefore one significant deficiency may render audit unsatisfactory Basis of ACCA’s audit file assessment

8. Agree scope, responsibilities and terms in engagement letter Reviewer to understand firm’s audit procedures Ideally, reviewer should assess audit plan before work commences Review must be documented Guidance for firms (and “hot” reviewers)

9. Important to identify relative significance of deficiencies identified Reviewer to identify key points to be resolved before issue of audit report Clear conclusion as to satisfactory/unsatisfactory Continuation of some “hot” or cold reviews advisable even if outcome of next visit is satisfactory Guidance for firms (and “hot” reviewers)

10. Failure to identify all significant deficiencies Giving the firm benefit of doubt where work recorded in inadequate detail Additional work recorded against review points – not on working papers Examples of “hot” review deficiencies

11. Overall conclusion not recorded – or inconsistent with deficiencies identified Marking scheme used to determine overall conclusion No guidance given on how to rectify deficiencies Examples of “hot” review deficiencies

12. Reviewers who fail to provide effective reviews are removed from ACCA’s list of Approved Training Companies Reviewers that succeed in assisting firms to “pass” next monitoring visit are often asked by firms to continue to provide training/review services Concluding remarks