Appendix 5 – Summary of QRP improvement actions GT
Area
Key messages from file reviews
Recommendations
File reviews this year have identified recurrence of significant issues, particularly the audit of property valuations and defined benefit pension arrangements.
Firms should:
- complete Root Cause Analysis as applicable the identified improvement areas;
- determine the actions required to address the common weaknesses identified; and
- prioritise actions required to address the significant recurring matters raised including consideration of a formal action plan response and monitoring of its application at a local level.
Firm response
The firm recognises the need to deliver audit quality of a consistently high standard, and we acknowledge we have more to do to ensure we get things right every time. At a firm wide level, we are introducing a new Audit Investment Programme (AIP). As part of this, we are establishing a new Quality Board, (within which public services will be represented) commissioning an independent review of our audit function, and strengthening our senior leadership at the highest levels of the firm, for example through the appointment of a full time Head of Audit that will sit on the firm’s Strategic Leadership Team. Whilst we recognise we have work to do, we are confident these investments will make a real difference.
We have also undertaken a root cause analysis and put in place processes to address the issues raised by the FRC. We have already implemented new training material that will reinforce the need for our engagement teams to challenge management and demonstrate how they have applied professional scepticism as part of the audit.
Specifically in terms of our local audit work, we have undertaken specific root cause reviews of our local audits, and we have provided a range of training, collateral and guidance for auditors on key areas including Property, Plant and Equipment and Pensions valuations. We have also introduced new workbooks to support auditors in documenting their PPE and Pensions work and our auditors are engaging greater levels of auditor-expert valuation and actuarial input. We are confident that this should help address recurring matters and secure better audit quality.