Taking action on audit quality concerns
PSAA has contracted with firms on the basis that quality audit services will be provided to audited bodies.
Where PSAA’s audit quality monitoring arrangements identify that an audit may not have reached the required standards (for example failure to meet contractual requirements, or poor feedback from audited bodies) firms will have the opportunity to rectify the situation. In the first instance, PSAA will meet with the contact partner for the relevant firm to discuss:
- the reason for any quality concerns;
- the action being taken by the firm to address the matter; and
- the expected timetable for improvement.
We would expect that, recognising their professional registration requirements, firms will take action to address problems as they are identified. Failure to do so could lead to loss of accreditation from the regulatory bodies. Concerns identified by professional regulators will be managed within that framework.
Where a firm fails to take action, or that action is inconsequential, we would raise the matter with the firm’s audit quality partner or equivalent for the firm as a whole. Ultimately, PSAA’s appointing person contracts provide that firms must comply with our monitoring arrangements. The contracts provide for termination where there is a material breach or persistent failure. Consistently providing poor quality audits would be viewed as persistent failure.