General news in Leaf Quality Systems

Applying Group Audit Principles


Applying Group Audit Principles ISA 600 (Revised) provides clear requirements on how to approach the audit of group financial statements. One may think that these requirements only apply to the audit of a group where consolidated financial statements are compiled, in terms of the relevant financial reporting framework. However, the scope of ISA 600 (Revised) goes beyond that, and there are different circumstances in practice where the principles of ISA 600 (Revised) may be applied. Sub-groups and branches ISA 600 (Revised), paragraphs 2 and 14(k), explains that group financial statements include the financial information of [...]

Applying Group Audit Principles2023-05-02T12:15:54+02:00

Investments in Associates


Investments in Associates When considering, during an audit, whether investments have been correctly accounted for, in terms of the relevant accounting framework, it is important to know whether the entity is required to compile consolidated financial statements. This can make a difference when determining whether the accounting policy applied for investments in associates is appropriate based on the accounting framework. IFRS for SMEs International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) Section 14, Investments in associates, indicates that its requirements apply to accounting for associates in consolidated financial statements, and in [...]

Investments in Associates2023-04-03T16:30:46+02:00

Accountable Institutions


Accountable Institutions Schedule 1 to the Financial Intelligence Centre Act, 2001 (FIC Act) has been amended, and took effect from 19 December 2022. Some of the amendments to the list of accountable institutions have far-reaching consequences that not all practitioners may be aware of. They may result in many firms and their clients becoming accountable institutions, which implies a greater burden of compliance with the FIC Act. Schedule 1 to the FIC Act The amendments to the list of accountable institutions contained in Schedule 1 to the FIC Act, as published in the Government Gazette No. [...]

Accountable Institutions2023-03-31T13:56:42+02:00

Evaluating the System of Quality Management


Evaluating the system of quality management In the past year, firms have been making a significant effort to update their systems of quality management and start implementing the new risk-based standards of managing quality. Throughout this coming year, firms will perform the first round of monitoring to determine whether they are complying with their updated systems. The final step of implementing the new standards must not be overlooked, namely evaluating the system of quality management. Evaluating the system The individual or individuals carrying the ultimate responsibility and accountability for the system of quality management, normally [...]

Evaluating the System of Quality Management2023-01-31T22:14:20+02:00

Monitoring and remediation


Monitoring and Remediation Many auditors underestimate the value of regular and robust monitoring of their systems of quality management, followed by focused remediation. If monitoring and remediation is performed correctly, the firm’s system of quality management is bolstered, which results in improved quality of engagements, and improved staff competence and morale. This, in turn, boosts profitability and client confidence. The evaluation of deficiencies needs to be brutally honest, however, so that the root cause of deficiencies may be properly addressed. Firm-level considerations The firm’s monitoring and remediation process must provide relevant, reliable and timely information [...]

Monitoring and remediation2023-01-31T22:11:04+02:00

Engagement performance


Engagement Performance One of the root causes of negative regulatory inspection findings is the lack of appropriate involvement by engagement partners on engagements. There are also many instances where audit documentation does not reflect the application of appropriate levels of professional scepticism when auditing and exercising professional judgment. The new quality management standards place increased emphasis on these important aspects to achieve the appropriate level of engagement quality. Firm-level considerations ISQM 1 para 31 requires firms to establish quality objectives that address the performance of quality engagements, including the following: a. Engagement teams understand and fulfil [...]

Engagement performance2023-01-31T22:11:14+02:00

Resources, information and communication


Newsletter April Significant Risk Assessment When considering whether appropriate resources are available to perform engagements, practitioners have traditionally only considered human resources available within the firm. The new quality management standards expand on this, however, by requiring firms to also consider the technological and intellectual resources available. Firms should also consider whether appropriate resources are available to maintain their quality management system; they should establish an information system to support the operation of their quality management system, and ensure that the necessary communication takes place internally and externally. Firm-level considerations ISQM 1 para 32 requires [...]

Resources, information and communication2023-01-31T22:11:24+02:00

Ethics, acceptance and continuance


Ethics, acceptance and continuance 30 September 2022 Ethics is a fundamental concept that needs to be established in an auditing and accounting practice. It cannot merely be given lip service, and should lead to proactively managing the risk of ethical threats and breaches that could inappropriately influence the firm’s compliance with relevant ethical requirements. One of the occasions when ethics may be involved in audit considerations is when deciding whether to accept, or continue with client relationships and engagements. Quality, integrity and independence should be the overriding factors. Firm-level considerations ISQM 1 para 29 [...]

Ethics, acceptance and continuance2023-01-31T22:11:43+02:00

Knowledge of the business


Knowledge of the business There is usually pressure on auditors to perform audits within tight deadlines, which often leads to jumping straight into fieldwork testing without spending adequate time on getting to know the client’s business or changes in the business from the previous year. However, gaining, and documenting a thorough understanding of the entity is a crucial step. It supports the risk and fraud risk assessment being performed, and the determination of the audit approach, while being the biggest source of identifying misstatements. The entity and its environment The auditor needs to perform risk [...]

Knowledge of the business2022-07-19T12:27:23+02:00

Engagement quality reviews


Engagement quality reviews Since the inception of ISQC 1, it has been a requirement that audit firms perform engagement quality reviews for appropriate engagements. These reviews are aimed at providing an objective evaluation of the significant judgments made by the engagement team and conclusions reached in formulating the report. However, do you really know when these reviews need to be performed; who can perform them and what they entail? When an engagement quality review is required Per ISQM 1 para. 34 (f), engagement quality reviews must be performed for: (i) audits of financial statements of [...]

Engagement quality reviews2022-07-01T10:55:13+02:00


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