Monitoring Report of Audit Inspection Unit (AIU) on KPMG
Audit inspection unit, an organ of the financial reporting council (FRC) is responsible to monitor the quality of auditing function provided by the firms has just reverted its judgment on KPMG’s audit work over the last one year.
AIU has recommended to the firm that they should pay particular considerations to providing extra supervision and training to the audit teams on the valuation of the impairment of goodwill and other assets mainly in key assumptions and disclosure requirements.’
The AIU said that the introduction of the new e-Audit system which has used by the firm first time for the purpose to review the audit.
‘Commonly in the audit ,a significant number of audit working papers were prepared outside of e-audit and entered In to the system at a later date .The result of these working papers prepared and reviewed after the date when audit report was signed .
‘Finally, it concluded that there were fewer chances to determine whether all required audit work had been performed and reviewed on or before this date. Before the firm’s audit report signed, it is the primary responsibility to the firm to establish such system and working practices which enables it to demonstrate or prove that sufficient appropriate audit evidence has been obtained and reviewed.
They also emphasise the importance of meaningful communication and coordination between the component (subsidiary) auditor and the principle auditor or group auditor .Group auditor must review the working of component auditor for the purpose of group audit.
They also focus on getting the direct confirmation of the existence and accuracy of assets and liabilities from the third parties and make effective communication with the audit committee.
AIU directed a number of recommendations to the KPMG which are shown below
· Improve firm’s policies and procedures
· Improvement in the Substantive analytical review procedures
· To reinforce the importance of professional scepticism