The Quality Review Board (QRB) reviewed all aspects of how an audit was performed in entities selected on a risk-based approach and came up with the Audit Quality Review 2019-20.
Dr. Parvinder Sohi Behuria, Chairperson of the QRB said that with closed businesses and organisations and restrictions on access to people and information, auditors across the world faced unprecedented practical challenges in performing audits during the COVID-19 pandemic.
Dr. Behuria further added that auditors had to adjust obtaining sufficient appropriate audit evidence, revise identification and assessment of certain risks of material misstatements and change planned audit procedures by performing alternative audit procedures.
It was reported that during the financial year 2019-20, QRB completed 87 reviews of audit quality of 69 entities in India. Out of these 87 completed reviews, QRB issued advisories to concerned Audit firms for further improvement in 71 cases and 3 cases were recommended to the Council of the ICAI for referring them to the Disciplinary Directorate of the ICAI for further necessary action.
The present report highlights the key findings observed in the audit quality reviews conducted during financial year 2019-20 indicating our approach for review, key trends, our expectations and other focus areas. I hope the concerned stakeholders will find this Report useful. Now, it is incumbent on the concerned Audit firms to take remedial actions for the deficiencies highlighted by the QRB, identify the root causes thereof and improve their audit quality.
Dr. Behuria informed that QRB has decided to conduct Thematic Review of Audit Firms’ Quality Control Procedures which would supplement the normal programme of reviews of Audit firms by the Quality Review Board. In this thematic review, QRB would look at firms’ quality control policies and procedures in respect of audits of entities other than those specified in Rule 3(1) of NFRA Rules, 2018 to make comparisons between firms with a view to identifying both good practices and areas of common weaknesses.
The Board will subsequently target such vulnerable areas for further insightful education and has decided to initially conduct these reviews for Audit firms having 10 or more partners.
Such reviews, which would be conducted through on-line Questionnaire mode, would be deeply focused on the selected aspect of the audit firm’s quality control procedures in much greater depth than is generally possible in a normal quality review.
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