Appendix 4 – Summary of QRP improvement actions EY
Area
Key messages from file reviews
Recommendations
File reviews this year have identified recurrence of significant issues, particularly the audit of property valuations and defined benefit pension arrangements.
Firms should:
- complete Root Cause Analysis as applicable the identified improvement areas;
- determine the actions required to address the common weaknesses identified; and
- prioritise actions required to address the significant recurring matters raised including consideration of a formal action plan response and monitoring of its application at a local level.
Firm response
Root cause analysis has been performed on all engagements where we identified significant findings during our internal inspections (no significant findings were identified during the external inspections).
Our IAS19 letters were enhanced for 17/18 audits and the reviews performed this year identified no updates required to these standard request letters. However, the mandatory documentation template setting out our approach to the audit of the Local Government Pension Scheme for admitted bodies has been enhanced to require more detailed documentation of our consideration of the materiality used by the pension fund auditor and the sufficiency of the work performed by the pension fund auditor for the purpose of the audit of the admitted body. In addition, the outcome of the internal quality reviews was the basis for mandatory training run in Autumn 2018 and this topic was included in that training.
The audit of property valuations was covered in the training run after the completion of our internal inspections in December 2018. This training covered:
- Improving documentation of the differing risks within the property, plant and equipment balance
- The challenge of assumptions that support valuations
- The consideration of assets not being valued in the current year
- Working with internal and external specialists
- Communication with management
Both topics will be areas of focus our 2019 internal inspections commencing in September 2019.