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Types of audit file review

Our experienced consultants visits hundreds of accountancy firms each year, helping them to remain compliant with the new clarified ISAs and improve efficiencies. Plus, wherever possible, we will advise of any areas to help improve your recovery rates.

We can conduct a number of different types of audit file review, depending on your requirements. See below for more details or call us on 0845 450 5555 to find out more. 

Audit compliance review

Auditing standards require a registered auditor to monitor compliance with the regulations at least once a year. The review covers all the necessary areas detailed within the audit regulations and, subsequently, the results from the review may be used when completing the annual return without you having to perform an additional compliance review.

Specifically, this type of review includes:

  • a review of CPD and staff training records;
  • a review of the results of any staff appraisals carried out during the period;
  • a check on the adequacy of professional indemnity insurance cover;
  • a review of fit and proper questionnaires and independence statements for partners and staff;
  • a review of the adequacy of action taken following previous reviews; and
  • a check on the adequacy of technical support arrangements, including consultation arrangements and a review of the technical library.

Following the review, you’ll receive a detailed report setting out the reviewer’s findings. The report will also include a copy of the completed annual audit compliance questionnaire, comments and scores on each of the files reviewed and recommendations relating to any issues raised.

Audit cold file review

With a cold file review, files can either be selected at random from invoices raised, or specific files that have been presented to the reviewer can be reviewed - the choice is yours.

Normally the cold file review would aim to:

(a) Identify whether the disclosure requirements had been properly met - incorrect disclosures are the largest subject of complaints to the Institute.

(b) Identify whether the Auditing Standards and Regulations have been properly complied with - each audit would be "scored" using a comprehensive file review checklist.

(c) Assess the effectiveness of any independent manager review and the partner review, looking for any points that should have been picked up by a manager but had not been, and likewise with the partner.

You would then be provided with a comprehensive written report following up on the visit. This report is in the form of a summary, setting out the main findings to which are attached sections covering the detailed points and the "scores" on the files. It is recommended that the detailed results are circulated to all staff so they are fully aware of the points that have been raised.

Audit hot file review

SWAT UK is increasingly being called upon to provide hot file reviews for firms. The purpose of a hot review is to identify any key areas that need to be addressed prior to signing the report.

The categories for review which may be undertaken, can be described as follows:

1. Comfort reviews

A number of firms, for their largest clients (not necessarily high risk clients), feel a little exposed and want someone else to review the work before the job is complete.

2. High risk reviews

One off reviews may be required on files in circumstances where, for example, the company is being sold and the firm feels that having a review undertaken by an independent party will help to decrease their risk.

3. Training reviews

Where key audit staff have left, a manager-style review on files may be undertaken in order to train a new manager or partner.

4. Independence reviews

Some sole practitioners require an outside review to ensure that it is reasonable for them to maintain an audit assignment when independence might be called into question. This is particularly the case where individuals have been an audit partner for more than seven years.

5. Hot file reviews by post

For many practitioners who only have a small number of audits, but who have had some form of restriction placed on them - this is the best option. In many ways it creates a higher risk for SWAT UK as there may not be the opportunity to discuss the job as fully with partners and staff. When completing such assignments it is vital that all relevant files are made available.

6. ISQC1 reviews

The ISQC1: “Quality control for firms that perform audits and reviews of historical financial information, and other assurance and related services engagements”, requires an independent hot review for all listed work and certain other high profile or high risk work.

Audit efficiency reviews

The standard audit cold file review is designed to ensure that the audits undertaken comply with the regulations. It is not, therefore, an efficiency review. However, the majority of our visits show more over-auditing than under-auditing. There is, therefore, scope to cut costs without cutting the quality of the work being undertaken.

Audit efficiency visits can be undertaken in one of two ways - looking back at last year's work, or looking forward to next year's.

The retrospective review takes completed assignments and seeks to determine where costs could have been reduced without adversely affecting the quality of the audit evidence. This will let you know how you could have improved with the aim of seeing the benefits next year.

The alternative is to use last year's file as the starting point for the coming year, with the visit helping to plan forthcoming assignments. See live audit planning reviews for more information on this type of visit.

Live audit planning reviews

Reviewing completed files is a necessary part of the quality control aspect of a firm, and will often raise ideas about improving the efficiency of the audit. However, some firms find it difficult to take specific examples identified during the review, and apply the principles raised to other audits.

As a result, we have developed a new type of visit. Instead of reviewing completed files, when any efficiency savings have already been lost, we can help your partners or managers plan audits that they are about to complete. In this way, the savings can be identified before the time is lost.

In this type of review we do not normally produce a follow-up report, but instead ensure that a detailed planning memorandum is produced for each file planned. This will identify the key tests on the audit, any tests or programs that may be omitted, and any alternative tests that will improve the efficiency. It will also consider the risk areas on each job, and the level of materiality.

Audit pre-regulatory reviews

The purpose of this visit is to undertake a dummy QAD ACCA monitoring review to identify any issues that still need to be addressed before the real visit.

More information and bookings

For more information on any of our audit file reviews, or to arrange a review, call us today on 0845 450 5555.