Earlier this month, the Independent Forum of Independent Audit Regulators (IFIAR) issued the results of their annual inspections findings on the 6 largest global audit networks (Deloitte, KPMG, PWC, EY, BDO and Grant Thornton) survey.
IFIAR’s annual Inspection Findings Survey shows a general decline in inspection finding rates; however, the high rates of findings continue to be of concern. The survey notes similarities in the nature and extent of findings compared to the previous year.
Overall, the results continue to show a lack of consistency when executing high quality audits and point to the need to address firm-wide systems of quality control, including in the critical area of auditor independence.
The FMA contributed to the survey this year. The areas of inspection themes, (see page 9 of the report) are consistent with our 2016 Audit Quality – Monitoring Report. The numbers of audit files, reviewed by the FMA that meet the criteria for IFIAR’s inspection, are relatively small. In 2016, FMA reported on 10 audits performed by three different audit firms. Of these 10, three had at least one inspection finding (30%). This is a slightly better performance than the average of IFIAR findings of 42%.
Participating in these surveys is an important part of our audit oversight. It enables us to work together on a global level with the largest audit firms to address audit quality review findings. This in turn has a positive impact on the quality provided by audit firms in New Zealand.