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IAASA publishes reports on the quality assurance review of firms that audit public-interest entities

Increase in percentage of inspected audit files needing improvement. Results are

Today, IAASA has published its 2023 quality assurance review reports in respect of seven
firms that perform statutory audits of public-interest entities in Ireland.
The reports summarise IAASA’s inspection of each firm’s implementation of the International
Standard on Quality Management (Ireland) 1 (ISQM 1) which was effective for the first time
during this inspection period. The inspection included an assessment of the design of each
firm’s system of quality management and an evaluation of the quality objectives, quality risks
and related responses identified. The quality assurance review reports include any findings
and recommendations made by IAASA to the firms regarding their system of quality

The reports also summarise the results arising from IAASA’s inspection of a sample of audits
of public-interest entities performed by each firm, including the grades assigned to the audits
inspected and any key recommendations made to the firm.

Taken together, the reports show that while findings of issues in firms’ overall systems of
quality have declined, there has been an increase in the number of audit file inspections
where improvements were required. In 2023 23% of files inspected required improvement,
up from 11% in 2022. While the issues varied across files inspected, there were consistent
findings in relation to the review of financial statement disclosure, audit of related party
transactions, and communications with those charged with governance.

Commenting on these results, Chief Executive Kevin Prendergast said

“The results of the 2023 inspections are disappointing, with 23% of audits inspected
requiring improvement. Our team takes a risk based approach to inspections, seeking to
identify where there is a greater risk of poor audit performance, meaning that the results are
not representative of the quality of all audits performed. Notwithstanding this, clearly there is
work to be done to improve the consistency of performance. We expect audit firms to carry
out a robust root cause analysis to address the issues identified. We will continue to work
with the audit firms under our remit to drive improvements in audit quality.”

IAASA undertook 31 (2022: 35) inspections of individual audit files in 2023. Of these 24
(2022: 31) were graded as good audits, seven (2022: four) required improvement. No audit
files inspected required significant improvement. On firmwide systems of audit quality,
IAASA raised five firmwide findings in 2023, with findings raised in four firms (2022: 16
firmwide findings raised in five firms).