Islamabad, July 10, 2019: After conducting an inspection of records of a mid-size audit firm, the Audit Oversight Board (AOB) has placed the firm on an action plan with substantive steps to improve its audit quality.
The decision to place the firm on an action plan was taken after finalizing the inspection report and giving the firm an opportunity to respond to the observations by AOB’s inspectors.
The action plan is to be implemented by 30 September 2019. Implementation of the action plan will be reviewed by ICAP’s Quality Assurance Board. AOB may also carry out an inspection in order to ensure that the action plan has been properly implemented.
AOB reviews the work done by ICAP’s Quality Assurance Board regarding the quality of work performed by audit firms. After reviewing the work performed by the Quality Assurance Board during the first quarter of 2019, AOB approved inspection of records of an audit firm.
During the inspection, AOB’s inspectors checked firm’s system of quality control under the International Standard on Quality Control 1 (ISQC 1) and audit engagements of a sample of listed companies under the International Standards on Auditing and relevant laws and regulations. AOB’s inspectors identified certain weaknesses in the review of ISQC1 and audit engagements.
AOB is the independent regulator established by the parliament on 2016 to protect the public interest in the audit of financial statements of public interest companies, which include listed companies and nonlisted public sector companies. Placing an audit firm on an action plan to improve its audit quality is a standard practice used by audit regulators internationally.