In the Australian Securities and Investments Commission’s (ASIC) findings from their latest round of audit inspections, outlined at the recent ASIC Liaison Meeting with the profession in Sydney, ASIC note that Australia has a skilled audit fraternity and quality is fundamentally sound. Those firms having their second and third visits reflect improvements. These firms are committing technical resources and generally have in place sound quality control procedures and training programs. However, the results for some firms visited for the first time are disappointing. In some cases, Audit methodologies do not fully comply with the force of law standards, monitoring systems are not up to date, engagement quality reviews are not being adequately performed, and client acceptance and continuance practices are not well documented. 
 
While the majority of files reviewed were found to meet the required audit standards, there were instances where documentation on the engagement file failed to provide enough evidence to support certain audit assertions. 
 
The future focus will be on those firms that audit entities of significant public interest. The latter will include companies that are in the unlisted retail finance sector, as well as those issuing unlisted and unrated debentures. 
 
Particular areas of focus will be:

• Independence and audit quality, including documentation around significant audit judgements  
  
• Sampling, fraud, analytical review, risk, related parties and compliance with laws and regulations standards  
  
• Implementation of the new network firm definition  
  
• Processes and documentation of approval to perform non-audit services  
  
• Using the work of experts (especially around valuations) and other auditors  
  
• Going concern considerations  
  
• Audit consultations and associated documentation.