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24 Jan. 2019

Auditing and Assurance Standards Board Chair welcomes latest ASIC Audit Inspection Report

The Chair of the Auditing and Assurance Standards Board (AUASB), Professor Roger Simnett AO, welcomes the release of the Australian Securities and Investment Commission’s (ASIC) Audit Inspection Findings for 2017-18.

Professor Simnett said, “The AUASB is committed to promoting initiatives that enhance audit quality and support ASIC’s Audit Inspection process, as consistent high quality audits are essential to the continued confidence in the quality of financial reporting”, and added that, “the AUASB also supports the ongoing efforts of the audit firms to improve audit quality and note that pleasingly, there has been improvement in ASIC’s inspection results”.

Whilst it is important to recognise that ASIC’s inspection focus is on the higher risk areas of an audit, and therefore these results may not be representative of overall audit quality across the profession, the AUASB supports the conclusion of ASIC Commissioner John Price that “the overall level of findings suggest that further work, and in some cases, new or revised strategies are needed to improve quality”.


The AUASB works closely with ASIC and the Financial Reporting Council (FRC) in a number of areas to improve audit quality. As part of this commitment the AUASB are:

  • Working with ASIC and audit firms to better understand the root causes of these inspection findings, and how the AUASB can better support the consistent application of auditing standards.
  • Working with the FRC in the execution of its Audit Quality Action Plan. This has included conducting surveys of Audit Committee Chairs (ACCs) and Investors to assess and analyse their views on audit quality. The survey indicated ACCs are very satisfied with the quality of their auditors. The Investor survey is still in progress, with results to be finalised in February 2019.
  • Monitoring audit quality matters and initiatives in other jurisdictions in order to identify best practices which may be considered and adopted to improve audit quality in Australia.


The AUASB Technical Work Program includes a number of projects to develop new standards or guidance materials that will assist auditors to address many of the matters raised as findings in ASIC’s latest inspection report, such as revised versions of:

  • ASA 540 Auditing Accounting Estimates and Related Disclosures and ASA 315 Identifying and Assessing the Risks of Material Misstatement, which will require auditors to perform more consistent and effective assessments and responses to risks of material misstatement in key areas, such as the audit of asset values and revenue highlighted in ASIC’s inspection report; and
  • The AUASB’s Quality Management Standards, which are being updated by the International Auditing and Assurance Standards Board (IAASB) to revisit specific aspects that enhance clarity and consistency of their application and will address many of the matters highlighted in ASIC’s inspection report, designed to maintain a strong culture of audit quality at audit firms.


“It is pleasing to note ASIC’s positive findings about the overall quality of enhanced audit reports, including descriptions of key audit matters requiring the most attention in an audit. This was a major change implemented by the AUASB in 2016 to improve the auditor’s communications with users of the auditor’s report”, Professor Simnett commented. “High quality financial reporting is a joint effort of many stakeholders including preparers, audit committees, directors, standard setters, regulators and auditors.  The AUASB works with all of these stakeholders to develop and maintain robust auditing standards that are capable of consistent and effective implementation, which underpin high quality audits and financial reporting, and which also build trust in our capital markets”.