auditqualitymatters

ISA 230 requires that the auditor should prepare, on a timely basis, audit documentation that provides: a) Sufficient and appropriate record of the basis for the auditor’s report; and b) Evidence that the audit was performed in accordance with ISAs. Preparing sufficient and appropriate audit documentation on a timely basis helps to enhance the quality of the audit and facilitates the effective review and evaluation of the audit evidence obtained and conclusions reached before the auditor's report is finalised. In addition, complying with the documentation requirements of the ISAs can also assist the auditor's consideration of issues associated with significant matters arising during the audit. This often enhances the quality of the reasoning followed, the judgments made and the conclusions reached.

In Malta, the Quality Assurance Unit (QAU) has consistently emphasised the need for high quality documentation of the rationale for the key audit judgments made in reaching the audit opinion.

Compass approach

COMPASS offers 2 major types of audit programmes to auditors. In Malta, the Quality Assurance Unit has consistently emphasised the need for high quality documentation of the rationale for the key audit judgments made in reaching the audit opinion.

a)     CAPs [Complete Audit Programme]

b)     MAPs [Micro-company Audit Programme]

a)     CAPs [Complete Audit Programme]

‘CAPs-Complete Audit Programme’ serves large/medium sized companies. This audit programme serves a number of purposes, including:

• Assisting the audit team to plan and perform the audits.
• Assisting members of the audit team responsible for supervision to direct and supervise the audit work, and to discharge their review responsibilities in accordance with ISA 220, 'Quality Control for Audits of Historical Financial Information'.
• Enabling the audit team to be accountable for its work.
• Enabling an experienced auditor to conduct quality control reviews and inspections in accordance with ISQC 1.
• Enabling an experienced auditor to conduct external inspections in accordance with applicable legal, regulatory or other requirements.

b)     MAPs [Micro-company Audit Programme]

 ‘MAPs-Micro-company Audit Programme’ assists auditors to conduct high quality, cost-effective SME audits. Management of a smaller entity often needs professional advice and assistance on a wide range of accounting and other related issues. It is common for the auditor to provide non-audit services, including accounting and taxation services. These services can enable the auditor to obtain useful information about the entity and about its objectives and strategies and the management style and ethos, as well as helping to keep the understanding of the entity up to date and so plan the audit efficiently. In the audit of smaller entities, the auditor may decide that most of the evidence will be obtained from substantive tests of detail. Notwithstanding this, as part of the process of assessing the risks of material misstatements, the auditor is required to document, amongst others:

• An evaluation of the control environment.
• Specific control activities relevant to the audit.
• Key indicators used by management for evaluating financial performance.

If you would like to discuss your audit programme and improvements that can be implemented in your audit approach, please contact Renzo Farrugia at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call him on 00356 99802272 or via skype.

^{Renzo Farrugia is recognised by the Malta Institute of Accountants to provide audit support services.}