1. QAD findings CCAB Training Providers’ Forum October 2007

2. ICAEW Introduction QAD visits - all sizes of firm Session outline – QAD findings – Underlying causes – Key messages

3. ICAEW QAD findings ISAs (UK & Ireland) – current issues ISQC1 Ethical Standards Accounts disclosure

4. ICAEW ISAs (UK & Ireland) Overall picture Audit quality Comparison with SAS compliance Main areas of difficulty……..ISA 315! Other common points

5. ICAEW ISA 315 (& 330) - main problem areas Documenting background information covering all required elements Determining what controls are relevant to the audit Evidence of design and implementation work Identification of significant risks and linkage to work planned Risk identification – differentiating between inherent and control risk.

6. ICAEW ISA 315 – extent of work on controls? Judgement Audits of smaller entities

7. ICAEW ISAs – other common points ISA 240; enquiries of management; focus of engagement team meeting; revenue recognition; management override; written representations ISA 260 – communicating significant audit findings Old chestnuts – rigour of substantive analytical procedures – dealing with uncorrected misstatements

8. ICAEW ISA issues – underlying causes (1) Reliance on audit systems without full understanding of the ISAs Difficulties in applying internal control concepts to smaller entities Ensuring the right people are involved at the right time

9. ICAEW ISA issues – underlying causes (2) Coping with extensive checklists Some fraud requirements not very visible in audit systems eg fraud risk within revenue recognition, management override. Timing issues – update of systems.

10. ICAEW ISQC1 Still some lack of awareness in smaller firms Belief that only applies to large firms Lack of tailoring of standard manuals Mostly a documentation issue

11. ICAEW Ethical Standards – common issues Non-audit services – accounting services – Definition of accounting services (“we just process the TB on IRIS”) – Documentation of safeguards PASE – Confusion between exemptions and alternative provisions Long association – Process for monitoring period as RI – Documentation of safeguards/communication to the client

12. ICAEW Accounts disclosure – desktop reviews Common issues: SME accounts - handout Charity accounts - review of accounts of smaller charities (incoming resources between £10k and £250K) - handout

13. ICAEW Key messages (1) Training needs Understanding ISA 315 Applying ISA 315 to smaller clients Substantive analytical procedures Ethical Standards Accounts presentation issues – SMEs and charities

14. ICAEW Key messages (2) Audit systems “Wood for trees”. Too many checklists? Catering for increasing requirements in the future Prompt and responsive updates

15. ICAEW Wrap up Good start with ISA implementation but still some way to go Training needs identified How much more can be added to audit programmes and checklists? Impact on audit quality? Questions?