IRBA Newsletter Issue 54

Issue 54 | April-June 2021 18 The department in the 8 th Inspections Cycle has introduced theme-based inspections. The objective is to prompt and measure the extent to which audit firms and auditors implement appropriate remediation to address reported deficiencies (themes). The theme-based inspections will be performed on selected engagement files, in addition to the risk-based planned inspections the department selects. The scope and focus may differ from firm to firm and will be communicated to the firm leadership at the start of the inspection. The results of these theme-based inspections will be tabled as part of the firm report to INSCOM for the decision, and the decision letter (together with the firm’s executive summary report) will be communicated to the audit firm leadership. Also, the theme-based inspections, together with the scheduled or planned firm or engagement file inspections, will be performed concurrently for a specific audit firm. The themes scoped in for the firm could be specific to an audit firm, based on previous inspection deficiencies reported by the IRBA to the firm, in the Public Inspections Report and/or themes that feature in the International Forum of Independent Audit Regulators reports. e. Enhanced Communications Plan As part of the 8 th Inspections Cycle strategy, we aim to achieve enhanced reporting by effecting changes to stakeholder reports, including the Firm Executive Summary report and the formal inspections report (engagement file inspections report). This will be achieved through improving our reporting to stakeholders by, for example, including reporting analysis and trends in the firm reports. Additionally, further information will be provided to facilitate the analysis of reports issued in the 8 th Inspections Cycle, as well as end-of-cycle reporting to provide feedback on the observations noted during the cycle. We believe that these initiatives will facilitate comparison and proactive engagement with the firms and our stakeholders to enable insightful dialogue within the profession. Looking Ahead and Key Considerations The 8 th Inspections Cycle Manual of Information ( Inspections Strategy and Process – 8th Inspections Cycle ) is now available on our website. We look forward to engaging more with the firms as we work towards improving the audit quality and protecting the public interest. As firms implement the ISQM standards, the following key questions might be worth considering: • If the firm is early adopting the standards, will it be ready and able to implement the full suite of quality standards as required? • Has the firm trained leadership and those responsible for the firm’s system of audit quality on the requirements and the ethos of the new quality management standards to provide oversight? • Has the firm implemented project and change/transition management processes to manage the transition to the new quality standards? • Was there an assessment of the current ISQC 1 controls already in place versus the controls required in the new quality management standards and how this impacts the objectives of the firm? Furthermore, how does this impact the identification of the quality risks? • Do the adopted firm policies and procedures appropriately address firm governance and the responsibilities of firm leadership? • How has the firm responded to the scalability considerations in the new quality standards? INSPECTIONS cont.