Our global quality assurance initiative is designed to ensure our practising members conform to international standards, with a view to protecting the public interest.

The primary responsibility of regulating and monitoring regulated work, including audit, of members outside the UK and Ireland lies with the national regulator of the countries in which members are based.  We have no legal basis for intervening in the regulatory processes of national regulators.  Such intervention would be perceived by many national regulators as unwarranted and unwelcome intrusion into the national matters that are their sole responsibility.

We have, therefore, adopted a collaborative approach to regulation and monitoring of our practising members based outside the UK and Ireland.

A collaborative approach to regulation and monitoring

In a number of countries, we have provided assistance to the national regulators to set up regulation and monitoring systems, where required.  We continue to provide assistance, for instance, through organising conferences and workshops and we also participate in donor-funded projects designed to provide regulatory assistance to national regulators.

In most countries, members who conduct audits are subjected to audit monitoring visits undertaken by the national regulators.  Where this is not the case, we offer to undertake monitoring visits under contract on behalf of national regulators, particularly of those countries where there are a significant number of ACCA practising members.    

We are appointed by the national professional accounting institutes of Cyprus, Belize, Bahamas, Barbados, Eastern Caribbean, Guyana and Trinidad and Tobago and the statutory audit regulators of Jamaica and Malawi, to undertake audit monitoring visits on their behalf.  In Cyprus, we also undertake anti-money laundering visits, on behalf of its national institute.  Apart from enhancing our reputation as a global body for professional accountants, we ensure that ACCA members who are also members of these national regulators are subjected to effective monitoring and regulation.

Monitoring visits  

We have adapted the tried and tested audit monitoring methodology we apply in the UK and Ireland for the work we carry out on behalf of national regulators. The monitoring visit is carried out in three phases – opening meeting to discuss and assess the firm’s audit quality controls and procedures (ISQC1); followed by audit file reviews to assess compliance with ISAs; and a closing meeting to discuss and agree the findings and to explain and communicate the conclusion, and provide guidance on any improvements required.

When assessing the outcome of an audit file, we apply the concept of 'reasonable assurance' that financial statements are free from material misstatement as defined in the ISAs.  This involves considering whether there is a significant risk that the financial statements could contain one or more undetected material misstatement as a result of deficiencies found in the audit work.  The outcome on an audit file is assessed as unsatisfactory if a significant deficiency is found in at least one significant risk area.

The overall outcome of a monitoring visit is assessed as satisfactory if the outcomes on half or more audit files reviewed are satisfactory, provided that none of any unsatisfactory audit files are in respect of public interest entities or larger clients; or none of the files reviewed show little evidence that an audit had been performed.  The overall outcome is also assessed as unsatisfactory if the firm is found to be in serious breach of the code of ethics, irrespective of the outcomes of audit file reviews.

The findings and the conclusion of a monitoring visit, together with guidance on any improvements required, are set out in a report which is initially issued to the firm.  The firm is required to provide its response to the report and an action plan to remedy the deficiencies, within an agreed timeframe.

The report is then submitted to the respective national regulator, together with the firm’s response, action plan, and the reviewer’s comments and recommendation on any action required.

Guidance on any improvements required in the quality of audit work is initially provided at the closing meeting of the monitoring visit.  Even if the overall outcome on the conduct of audit work is satisfactory, the firm is still required to provide details of the action it is taking to rectify any (less significant) deficiencies identified in the report to further improve its standard of audit work.

If the overall outcome is unsatisfactory, the firm is required to provide a detailed action plan in a prescribed form, using a template designed by us.  Guidance on how to complete the template is provided at the closing meeting.  The template together with written instructions on how to complete it, are also enclosed when the report is issued to the firm.

Regulatory action  

As the national institutes or regulators are the statutory audit regulator, they have the primary responsibility for taking regulatory action and not ACCA.  We are nevertheless actively engaged in the provision of assistance to national regulators to set up appropriate regulatory processes to deal with issues identified at monitoring visits, and take effective action.

However, if a member is subjected to disciplinary action by a national institute or regulator for any reasons, including those arising from any findings of a monitoring visit; we will consider what action it should take against the member. Under our bye-laws, a member disciplined by another professional body or regulator is rendered liable to disciplinary action by ACCA.