EY remain committed to audit quality improvement but caution interpretation of ASIC report

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Wednesday, 5 December 2012 — EY Oceania Assurance Managing Partner Tony Johnson has encouraged readers of the Australian Securities and Investment’s (ASIC) report on its audit inspection program to understand its context and the detail behind some of the key findings.

This follows the issue of ASIC’s audit inspection program for the 18 months ended 30 June 2012.

Mr Johnson said that he supports the underlying themes of the report, and in particular the ongoing focus on the importance of professional scepticism as a crucial driver of audit quality.

“Positively, the report also recognised that an adverse finding on a matter during an ASIC review does not necessarily mean that there will be material misstatements in the overall financial report,” Mr Johnson said.

However, Mr Johnson noted that the design of the inspection program did not measure the instances where auditors detect material misstatements during the audit process that are subsequently corrected before a financial report is completed and released.

“This is an important issue. While compliance with auditing standards and documentation is important, audit quality cannot be measured solely by reference to these factors alone. A crucial aspect of audit quality is the impact the audit process has on ensuring companies accurately report their results and comply with accounting standards,” Mr Johnson said.

EY look forward to working with both ASIC and the broader audit profession to address areas of concern. We remain committed to audit quality improvement and continually responding to any findings, whether identified through our internal quality assurance programs or though external inspection programs such as those conducted by ASIC.

“EY have continued to increase focus on audit quality through enhancements to methodology and tools, as well as through specific training and professional development,” Mr Johnson said.

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This news release has been issued by EY Australia, a member firm of Ernst & Young Global Limited.

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Contact details:

Katherine Meier
EY Australia
Tel: +61 3 9655 2620 or 0417 859 323