The Audit Monitoring visit consists of an opening meeting, fieldwork and a closing meeting. These are discussed below. You can also download the publication 'Your Audit Monitoring Visit' for a more detailed explanation of the visit process.
The Opening Meeting
The visit will start with a meeting to discuss the firm's audit practice and audit clients, and allows the Reviewer to understand the firm and its associated risks. This allows the Reviewer to focus the fieldwork on areas of risk.
The Fieldwork
As part of the visit fieldwork the Reviewer will select a number of files for review. As part of this review the Reviewer will be checking the quality of audit work and how the audit file supports the final audit opinion. The Reviewer will also assess compliance with International Standards on Auditing, financial reporting requirements (usually UK GAAP or if a listed group, possibly IFRS requirements) and Companies Act requirements. Each audit engagement principal will require to respond in writing and by discussion to any review points or findings raised by the Reviewer. This will mean that each audit engagement principal should ensure that time is set aside to do this on the day of the review.
In addition to reviewing audit files, the Reviewer will also review the firm's "whole firm" policies and procedures, such as appraisals, declarations, CPD, PII, ethics procedures, anti money laundering, internal quality control review procedures and the firm's Audit Compliance Review process. The Reviewer will be reviewing these policies and procedures to ensure that they comply with the International Standard on Quality Control 1 and the Audit Regulations and Guidance
The Closing Meeting
The main findings coming from the file reviews and the review of the whole firm policies and procedures will be pulled together into a preliminary report called the closing meeting notes. This will be discussed in detail with the firm at the closing meeting and the firm is usually given 14 days to respond and produce an action plan to these findings.
Visit Closedown
All visits are independently quality reviewed to ensure that the visit methodology has been met, that the visit conclusions are fair and balanced. All monitoring reports are considered by the Audit Registration Committee, which is made up of qualified Chartered Accountants from ICAS registered audit practices, as well as lay members. The Committee will make the decisions on the continuance of a firm's audit registration and of any corrective action that requires to be taken. The Committee will take into account the follow up action taken from previous monitoring visits. The Committee is also responsible for referring any disciplinary issues to the Institute's complaints and disciplinary process. The Committee is also bound by confidentiality rules.
What is the process after the visit?
The Review team have a 30 day target to finalise your visit and send the relevant papers to the Audit Registration Committee (ARC) Secretariat.
When you will hear about the outcome of your visit will depend on whether there is anything to follow up on post visit or if your regsitration will continue without any additional information being provided to the Committee. All reports are considered by the Convenor or a nominated Committee member before they are put on the next ARC agenda. As the ARC only meets every two months it may be some time before you hear.
If you are concerned about the delay in hearing back after the visit, please phone the ARC Secretariat on 0131 347 0282.
Click the FAQs below for more information.
In relation to Audit Monitoring Visits, ICAS complies with the EU 8th Directive requirements, as follows:-
- The aim is to visit all firms at least once every six years and for firms auditing listed companies at least once every three years in conjunction with the Financial Reporting Council's Audit Inspection Unit, although the nine largest firms in the UK are visited more regularly.
- Although the minimum requirement is six years, firms may receive visits within a shorter space of time depending on the results of the outcome of their previous audit monitoring visit and depending on any risk factors that may arise from their Annual Return.
Most monitoring visits are usually selected based on risk, although some visits may be selected for other reasons such as a random selection; or a visit being conducted at the request of the Audit Registration Committee. The risk process works as follows:
- each registered firm must complete an Annual Return;
- the Annual Return computer system will then identify risk factors for each firm which will then be assessed by Audit Monitoring;
- in addition to these risk factors Audit Monitoring will also take into account the results of firms' past monitoring visits and may also take into account other information such as company search information or other regulatory information received;
- based on an assessment of the above information, which is considered in conjunction with the minimum cycle requirements (three year cycle for firms auditing listed or other significant entities and six years for others), and possibly company search information, the firm may be selected for a visit.
Audit Monitoring writes to firms when they are selected for a monitoring visit, at least six weeks before the visit (unless this visit has already been postponed or rescheduled). The visit notification letter will provide details of the proposed date for the visit, the time the visit is estimated to take and the name of the reviewer(s) who will conduct the visit.
Firms may be offered a Quality Review visit at around the same time as the audit monitoring visit and the firm can liaise with the Visit Co-Ordinator as to whether the quality review visit should proceed. The Quality Review visit is explained in the Quality Review section of this website.
In addition to the visit notification letter each firm will receive a visit feedback form in order to provide useful feedback on what it thought of the visit process, and a documents and records list which explains what information requires to be made ready for the visit. In addition, each firm will receive a copy of Your Audit Monitoring Visit which provides a detailed guide on what to expect from the visit.