The Australian Securities and Investments Commission (ASIC) has signalled that it will be inspecting a number of mid-tier audit firms as part of the second phase of its audit inspection program.
The inspection of the mid-tier firms follows on from ASIC’s just-completed first phase review of audit companies which included Deloitte Touche Tohmatsu, Ernst & Young, KPMG and PricewaterhouseCoopers.
ASIC executive director, compliance, Jennifer O’Donnell said that these firms are national partnerships and together audited approximately 54 per cent of all entities listed on the Australian Stock Exchange, and 91 per cent by market capitalisation of the 300 largest entities.
“As this was the first time ASIC had conducted such inspections, we focused on assessing whether the firms had documented and implemented a quality control system that provides reasonable assurance that they comply with the independence requirements,” O’Donnell said.
She said that the exercise had identified a number of issues and suggestions had been made to the firms for improvements.
“Our first year of inspections was focused on independence, and we are actively expanding our resources and capabilities to review audit methodology and the application of Australian Audit Standards,” O’Donnell said.
