As we continue to navigate significant change and disruption in the economy and business environment, audit quality remains our priority. BDO is committed to preserving trust through the delivery of our audits driven by agility and innovation. We are clear on our role and responsibility to support the integrity of reporting and disclosures that instil confidence in capital markets.
The measures we use to gauge our audit quality continues to demonstrate the high quality of BDO’s audits. There are a number of measures that continue to support our quality objectives. However, there are some that have not worked as we would have hoped and will be changed. It’s important to remember, and ASIC concurs, there is more than one measure of audit quality. We understand the importance of having a culture of quality embedded into our actions and behaviours. In addition to the ASIC report, we have our own robust internal inspections program (IIP), monitoring programs within our risk and quality group and our annual Audit Quality Culture Survey. We also have an inspection program managed by BDO Global.
We take our public interest responsibilities seriously and, as part of our commitment to transparency, each year we publish our Transparency Report, demonstrating how we deliver quality audits that provide trust. With this, we also publish our ASIC Audit Inspection Report.
ASIC undertake inspections of BDO’s audit files during 2022 to promote improvements and maintenance of audit quality.
ASIC has released its findings of the reviews of key areas in audits conducted by BDO in the 12 months to 30 June 2022. In ASIC’s view, they considered we did not obtain reasonable assurance the financial report was free of material misstatement (negative findings) in two of the ten key audit areas reviewed (20%). This level of findings is consistent with that for the year ended 30 June 2021 (20%). There were negative findings in 36% of areas reviewed across all firms inspected by ASIC and 32% in areas reviewed across the largest six firms.
Many of the key areas reviewed by ASIC required significant professional judgement and subjectivity. While we may not agree with some of the views formed by ASIC, we incorporate these findings with the results of our own internal inspections and use these outcomes to continually improve our processes and systems that support audit quality.
The table below sets out the BDO results of recent ASIC Audit Inspections:
12 months to 30 June 2022 | 12 months to 30 June 2021 | 12 months to 30 June 2020 | 12 months to 30 June 2019 | |
Number of files reviewed | 3 | 3 | 3 | 2 |
Number of key areas reviewed | 10 | 10 | 10 | 7 |
Number of key areas with findings | 2 | 2 | 2 | 2 |
% of key areas with findings | 20% | 20% | 20% | 29% |