Problems cited include “insufficient scepticism and challenge of management”, poor documentation and failure to test management forecasts.
The majority of non-public interest entity (PIE) audits are good. But a quarter need either improvement or significant improvement.
That’s the conclusion of a review of 960 audits undertaken by the Institute of Chartered Accountants in England and Wales (ICAEW) spread across the whole range of audit firms from small to the Big Four. The review found that 18% of audits required “improvement”, while 8% reached the next level of severity requiring “significant improvement”.
This finding, though in some ways better than previous years, has the ICAEW worried.
“The report shows there is good practice among most audit firms, but
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