Jul 31, 2023
The AFRC has today published an Audit Focus, which urges auditors to take a proactive approach by commencing their audit planning process well in advance of the financial year-end. The Audit Focus can be accessed on the AFRC’s official website at the links provided below.
This Audit Focus emphasizes the importance of effective audit planning in ensuring high-quality audits. It outlines the key areas where auditors should focus their attention and effort and sets forth the AFRC’s expectations of auditors, management and audit committees to fulfil their respective statutory duties, roles and responsibilities during the audit planning process.
Their concerns include:
Failure to identify relevant risks.
Failure to fully address audit issues.
Key areas that require special consideration in audit planning :
Volatile economic environments and market conditions, e.g., continuously rising interest rates and inflation.
Significant changes in business operations, e.g., acquisitions or disposals of business or assets.
Significant non-routine transactions or unusual trends.
Updates to audit plans.
AFRC's expectations of auditors :
set the tone from the top & foster a culture that promotes timely and comprehensive audit planning.
heighten their professional skepticism.
communicate the audit plan early on & maintain regular and effective dialogues.
review the interim financial information.
comprehensive understanding of the entity's business operations, internal controls, and external factors.
Engagement partners should be actively involved in supervising the entire process.
sufficient and appropriate talents and resources.
AFRC's expectations of management and audit committees :
review and approve the audit plans.
provide auditors with timely access to all necessary information and personnel.
prepare high-quality financial information.
setting audit fee at an appropriate level.
Please review the following links for further information.
Press Release : https://www.afrc.org.hk/media/rh4ljch4/afrc_press_release_audit_focus.pdf
Audit Focus : https://www.afrc.org.hk/en-hk/Documents/Publications/periodic-reports/2023_Audit_Focus_Effective_Audit_Planning.pdf