Another question for steve

Gill Gittings
Gill Gittings Registered Posts: 121 πŸŽ† 🐘 πŸŽ†

Sorry to keep asking you so many questions but this is something that none of us at our office understand:001_wub:

We had an audit inspection a couple of weeks ago which did not go too well. One of the points raised was with one of our clients who did not have an audit in the previous year but because they breached the sales in 2008 they had to have one. The reviewer said that our auditor report was worded incorrecly but none of us know how.

Can you shed any light on it for us?



  • Steve Collings
    Steve Collings Registered Posts: 997
    Hi Gill,

    Sorry to hear your inspection didn't go too well.

    Your question is too vague for me to give a specific answer. I take it you used the wording issued in the 2006/6 bulletins that conforms with ISA 700 (the standard audit report text).

    If a client was not audited in the prior year then you have to make reference to this in your auditors report. If you look to the provisions of ISA 710 at paragraph 18 it states that you have to state the corresponding figures are not audited. This statement should be made in the introductory paragraph.

    ISA 710 does not (surprisingly) have examples of how this should be worded in the appendices. From the information you have given I can only assume this part of the standard has not been complied with.

    If, however, your auditor's report was qualified as a result of either insufficient audit evidence to support the opening balances or something of a material nature in the year under audit then this may have given rise to the inspector stating the wording was incorrect. In any event, I would have thought the inspector's report should have clarified what the wording should have been in your client's circumstances. The wording in the auditors report should always follow the APB's bulletins (2006/6) and ISA 700.

    Incidentally, could I ask does your firm have access to technical advice and the standards as well as an up to date audit programme? The reason I ask is that if the inspection was not satisfactory then your firm must improve its audit quality because if not then your firm is at risk of losing its auditing licence and appearing in the accountancy press for reasons of an unfavourable nature.

  • Gill Gittings
    Gill Gittings Registered Posts: 121 πŸŽ† 🐘 πŸŽ†
    Thanks steve. It was about something like you say.
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