All the economic challenges being faced in 2017, require auditors to adopt a new game plan which balances audit profitability with audit quality, says Edwin Selbst, W.consulting’s head of Assurance Advisory and Efficiency.
In reaction to the release of the public inspection report by the Independent Regulatory Board of Auditors (IRBA) Selbst, who is also the Chairman of the South African Institute of Chartered Accountants’ Assurance Guidance Committee, says auditors need a change in their game plan.
“South African auditors and their respective firms have a vital role to play in improving audit quality. The solution needs to incorporate a detailed understanding of the cause of the findings included in the IRBA’s Inspection Report. Sometimes a root-cause analysis isn’t enough and a fresh pair of eyes or an independent evaluation of quality control process is required.”
Selbst advises that audit firms, no matter what their size, need to re-engineer their Quality Control methodologies and procedures.
According to Selbst this is critical as the IRBA media release clarified by that “inspections and regulation are not only critical to ensure that the highest standards are maintained in a profession, but also provide the public and investors with the confidence that they can rely on the work of auditors. Confidence stimulates investment, and investment creates employment and growth.”
In a press release on 23 March IRBA stated that there was “an overall regression in audit quality” for 2016. The IRBA found “there was a 41% increase in the total number of significant findings raised on engagement inspections.” A significant finding is one which results in the review being unsatisfactory, meaning that a re-review will be required.