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IFIAR publishes its 2021 annual survey of inspection findings

25/03/2022

IFIAR has published its tenth annual survey of inspection findings arising from its member regulators’ individual inspections of audit firms. IFIAR’s 2021 survey of inspection findings is available here. Should you have any queries, please contact IAASA at [email protected]

About IFIAR’s 2021 survey

52 IFIAR members contributed to the survey and reported findings affiliated with the six largest global audit firm networks: BDO, Deloitte, EY, Grant Thornton, KPMG and PricewaterhouseCoopers.

Effects of Covid-19

The inspection results included in the 2021 survey are predominantly for inspections of audits that concluded prior to the advent of the pandemic. Only 16% of audit inspections reported in the 2021 survey were those of listed public-interest entity audits with fiscal year ends in 2020. The number of audits of listed public-interest entities inspected by IFIAR members remained consistent with prior years.

Firm-wide systems of quality control

IFIAR notes that a strong system of quality control is a critical element in improved and sustained audit quality.  The global audit firm networks have devoted resources to their systems of quality control, resulting in a general downward trend in findings in recent years. However, in some cases, findings have increased, indicating that more work needs to be done. IFIAR’s 2021 survey reports an increase in findings relating to independence and ethical requirements. IFIAR encourages member firms to continue implementing quality management activities.

Inspections of listed public-interest entity audits

IFIAR’s 2021 survey reported that 30% of audit engagements inspected had at least one finding, compared to 34% in the 2020 survey.

The five inspection areas with the highest frequency of inspection findings for listed public-interest entity audits were:

  • the audit of accounting estimates
  • internal controls testing
  • the adequacy of financial statement presentation and disclosure
  • revenue recognition
  • audit sampling
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