Warming up cold cases
Audit & Beyond finds out how sole practitioners and small firms can maximise the benefits of cold file reviews.
Cold file reviews (CFRs) play an important role in the monitoring and improving of audit quality. Done well, they enable audit firms to identify areas where audit work should be improved – as the Quality Assurance Department (QAD) has pointed out, in more than one of its Audit Monitoring reports. However, CFRs are about more than compliance. They may also highlight areas where the auditing team can improve efficiency, for example, by helping the firm to cut down the amount of unnecessary documentation that QAD reviewers sometimes see on audit files.
For cold file reviews to be effective, firms must evaluate their findings and implement an action plan which addresses any weaknesses in a timely manner. When he was a lone responsible individual (RI), sole practitioner Peter Upton used the external cold file reviews undertaken at his firm as the basis for continuous improvement. He would identify areas the review report described as ‘adequate’ and work with his audit staff to move these up into the ‘good’ category. “We used feedback from the reviewer to help us to improve our practices,” he says. “There is always something we can do better.”
This is an extract from an article in the July/August 2015 edition of Audit & Beyond, the magazine of the Audit and Assurance Faculty.
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