Taking action on audit quality concerns
PSAA has contracted with audit firms to deliver audit services to audited bodies in accordance with:
- the 2014 Act, the 2015 Regulations and any other relevant Law or arrangement;
- the Code of Audit Practice;
- any Supplementary Guidance;
- the Contract;
- Good Industry Practice; and
- any requirements contained in the Terms of Appointment or Supplementary Guidance including reporting requirements.
Where our audit contract quality monitoring arrangements find that an audit firm may not have met a contractual requirement, there are both informal and formal mechanisms through which we can seek rectification by the audit firm.
We would meet with the audit firm to understand and discuss:
- the reason for the issue including the effect on any audited body and PSAA;
- the steps which the audit firm proposes to take to rectify the issue including timescales; and
- any dependencies of the audit firm on PSAA or any audited body to enable resolution.
Where an audit firm does not take action, or that action is inconsequential, there are contractual escalation mechanisms that we can apply.
Ultimately, our audit services contracts require audit firms to follow our monitoring arrangements. The contracts provide for termination where there is a material breach or persistent failure such as consistently failing to substantially deliver its obligations would be viewed as persistent failure.
We would expect that, recognising their professional registration requirements, audit firms will take action to address problems as they are identified.