Document ID: chunk:federal_register_of_legislation:F2020C00630:reg:25:p29
Version: federal_register_of_legislation:F2020C00630
Segment Type: reg
Provision Reference: reg 25 (pt 29/31)
Character Range: 92011–95182

* Communication to appropriate firm personnel of weaknesses identified in the system, in the level of understanding of the system, or compliance with it.

           * Follow‑up by appropriate firm personnel so that necessary modifications are promptly made to the quality control policies and procedures.

A66.         Inspection cycle policies and procedures may, for example, specify a cycle that spans three years.  The manner in which the inspection cycle is organised, including the timing of selection of individual engagements, depends on many factors, such as the following:

           * The size of the firm.

           * The number and geographical location of offices.

           * The results of previous monitoring procedures.

           * The degree of authority both personnel and offices have (for example, whether individual offices are authorised to conduct their own inspections or whether only the head office may conduct them).

           * The nature and complexity of the firm's practice and organisation.

           * The risks associated with the firm's clients and specific engagements.

A67.         The inspection process includes the selection of individual engagements, some of which may be selected without prior notification to the engagement team.  In determining the scope of the inspections, the firm may take into account the scope or conclusions of an independent external inspection program.  However, an independent external inspection program does not act as a substitute for the firm's own internal monitoring program.

Considerations Specific to Smaller Firms

A68.         In the case of small firms, monitoring procedures may need to be performed by individuals who are responsible for the design and implementation of the firm's quality control policies and procedures, or who may be involved in performing the engagement quality control review.  A firm with a limited number of persons may choose to use a suitably qualified external person or another firm to carry out engagement inspections and other monitoring procedures.  Alternatively, the firm may establish arrangements to share resources with other appropriate organisations to facilitate monitoring activities.

Considerations Specific to Public Sector Organisations

Aus A68.1 In the public sector, an auditor appointed under statute (for example, an Auditor‑General) may delegate responsibility for an engagement.  The monitoring process needs to include, on a cyclical basis, inspection of at least one completed engagement of each person with delegated responsibility for an engagement and its performance.  This includes an external person engaged as the person responsible for an engagement.

Communicating Deficiencies (Ref: Para. 50)

A69.         The reporting of identified deficiencies to individuals other than the relevant engagement partners need not include an identification of the specific engagements concerned, although there may be cases where such identification may be necessary for the proper discharge of the responsibilities of the individuals other than the engagement partners.

Complaints and Allegations

Source of Complaints and