We are a sole practitioner firm and have just had a Practice Assurance visit, which went okay really (we had a compliance review prior to the actual visit, and this helped a lot).
The main point to come out of the visit was the following. We are registered auditors but don't carry out any statutory audits, though we do sign some regulatory reports that require us to be registered auditors. I made it clear that were we to have the opportunity to take on a client requiring a statutory audit, our preference would be to pass the actual audit work to specialists, and that we would definitely not merrily embark on a statutory audit with no immediate experience, or the necessary tools for the job. We do attend some audit content training every year, are members of the Audit Faculty, and carry out an annual compliance review etc, but do not subscribe to a statutory audit program - what's the point if we don't do audits? Well the point, apparently, is that as registered auditors we need to be in a position to carry out an audit at any given time - it's not sufficient to say that were we to take an audit client on (and it's fairly unlikely) we would go out and get the necessary tools for the job.
So what do other firms do please? We've really got better things to do with our money than buy an audit program we aren't planning on using. But we need to maintain our Registered Auditor status whilst there are non statutory reports requiring this status.
Any advice very gratefully appreciated.
David Evans
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You have the choice
You cannot enjoy the benefits of holding yourself out to be a registered auditor, without accepting the obligations that go with it - maintaining your competence to conduct audits and inspection by your regulator.
So, either buy the Kestrian Company Audit System for £140 or give up being a registered auditor and save yourself the annual fee and the cost of CPD, along with the fee income from your non-statutory audits. It is a business decision.
Where is that in the rule book?
There is absolutely nothing in the rule book to say you must have an audit manual on the premises. On those grounds, the inspectors can take a running jump and go tick their boxes somewhere else. I comply fully with what the rule book really says, not what some tick-boxers think it should say. This is just pettiness yet again. Surely just the act of buying a manual shouldn't make a difference - what if you have bought it but never read it, or even bought it but not opened the envelope - presumably you'd get your tick then! What a crazy world we live in.
Still, shouldn't be surprised, in a previous job, we had a monitoring visit who looked at probably our most "dodgy" audit file. After a full day, they came up with long lists of papers that weren't indexed together, checklists that had been signed off by a partner but not a manager, etc - i.e. all the usual claptrap. But what did they not mention? The fact that the entire "stock" section was full of controversial correspondence, documentation, spreadsheets, workings etc about the biggest and least provable item in the accounts - a massive, completely out of proportion client's own estimation of closing stock, which should have meant the audit report was qualified (or actually it was so crazy, we should have probably resigned as auditors), but the senior partner over-ruled the audit clerks, senior and audit manager to give a clean audit report because the director was a family friend. We asked the inspector what he thought about the stock section and his reply - it all looked properly referenced and signed off to him - he hadn't bothered to even get the faintest idea of what was going on.
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I am a sole practitioner and am in exactly the same boat as you.
I occasionally carry out audits but most of the time I need my audit registration for signing reports which require a registered auditor as you do.
I subscribe to the Kestrian company audit system, the Kestrian model accounts and disclosure checklists and the Kestrian audit compliance system.
Yes, it does cost money but I think of it as just another annual audit fee.
I too have had a practice assurance visit and all went smoothly.
I suppose you can see the reason behind this: if you are a registered auditor, you should be able to carry out any audit at any time regardless of the fact that you may not in fact choose not to do so.
Me too!
I'm also a registered auditor with no audit clients. I havn't had a visit or inspection but am interested in this topic.
I really can't see the problem and certainly don't see why I should subscribe for an audit manual that may never be needed. I would certainly object if this point was raised at an inspection and appeal to the highest level.
I too continue to attend CPD audit updates and refresher courses to keep my knowledge up to date if the need arises.
I understand the point that I need to be in a position to perform an audit if necessary, but at the end of the day, I CHOOSE whether or not to accept an audit appointment - the fact I am a registered auditor does not give anyone else the right to MAKE ME do one.
If a client came along wanting an audit, it is surely part of my acceptance procedures to make sure that I can adequately perform the audit, and as part of that procedure, I would have to consider how quickly I could obtain a suitable audit system and train myself and staff in its use
I have used both Mercia and Kestrian in the very recent past, not to mention the ICAEW systems a few years earlier so they are not entirely new to me and could be re-learned fairly quickly, and I am fairly certain that the paperwork itself could be obtained within a few days, so I could put myself in a position of being able to do the audit within say a week at the most, probably far sooner than getting all the necessary engagement paperwork drafted and signed by the client.
Now, of course, if it turns out that the audit system can't be obtained quickly enough (i.e. the client wants the audit doing yesterday) then as part of my client acceptance procedures, I would have to decline. Simple, end of story, where is the problem??
It's about time the inspectors/compliance officers concentrated on the important things instead of brainlessly ticking boxes - the modern scourge!