Regulatory action by Admissions and Licensing Committee
Steven Essayan explains the options available to ACCA's Admissions and Licensing Committee in dealing with firms which have had unsatisfactory outcomes to monitoring visits.
When the Admissions and Licensing Committee finds that a firm's audit work is unsatisfactory at a second or subsequent visit it has to decide what regulatory action it should take. It usually orders a firm to have its work on some or all or its audit clients reviewed by an approved training company and to receive an early monitoring visit at the firm’s cost. The Committee also warns the firm that its audit registration will be in jeopardy if it does not significantly improve the standard of its audit work by the time of the next visit.
In many cases at the following visit the firm is found to have achieved a satisfactory standard of audit work and is consequently released from the order. However, this is not always the case, and the Committee then has to decide on the appropriate action where it is considering a firm’s unsatisfactory standard of audit work for a second time. There are also cases where a firm achieves a satisfactory standard of audit work after an order from the Committee but then deteriorates. The Committee currently has two options in such circumstances: to remove the firm’s audit registration or to continue with or re-impose the previous order.
The Committee will shortly have a third option where a firm fails to achieve a satisfactory standard of audit work, having already received a warning from the Committee. It will involve the audit qualified principals in a firm being required, at their own cost, to attend a workshop on auditing and passing a test within a prescribed period. This is likely to be in addition to a firm having to have its audit files reviewed by a training company. It will enable the Committee to give a firm a further chance to improve while showing it has taken appropriate regulatory action. The firm will be able to attend the meeting so that it can make its own representations to the Committee.
The course will be the existing audit workshop courses run by ACCA UK and ACCA Ireland. For the test the questions will be set by a member of the Ethics and Authorisation Department. They will test the practical application of auditing standards to particular situations, including the planning of audit work and the conduct and recording of audit procedures. The test will not be done under examination conditions but in the person’s own time after completing the course. It will be marked by the same people who mark the Audit Orientation Course and Test. The course and test will also act as a re-qualification test for those whose audit registration has been removed and who wish to regain it. It is more appropriate than the Audit Orientation Course and Test which is for those who are applying for a practising certificate and audit qualification for the first time and therefore covers all practice matters and not just the conduct of audit work.