Publication:

ASIC Audit Inspection Report 2019

12 December 2019

As part of BDO’s commitment to transparency, each year we publish our Transparency Report, providing information about how we support and improve our systems of quality control. We understand that there is a growing appetite for more transparency and in light of this, we have published our ASIC Audit Inspection Reports.

ASIC undertake annual inspections of BDO audit files to promote improvements and maintenance of audit quality. Audit quality is important as a quality independent audit supports a financial report that provides useful and meaningful information to users of these financial reports.

ASIC has released its findings of the reviews of key areas in audits conducted by BDO in the 12 months to 30 June 2019. In ASIC’s view, they considered we did not obtain reasonable assurance that the financial report was free of material misstatement in two of the seven key areas reviewed (29%).

Many of the key areas reviewed by ASIC required significant professional judgement and subjectivity. In some cases, we do not agree with the view formed by ASIC. While we may disagree with the findings of 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.

It is important to remember, and ASIC concurs, that there is more than one measure of audit quality.  In addition to the ASIC report, we have our own robust internal inspections program, monitoring programs within our risk and quality group and a range of other risk and compliance activities.  We also have an inspection program managed by BDO Global. All these measures indicate that audit quality at BDO is high and the findings over a number of years indicate that this standard has been maintained.

The table below sets out the BDO results of recent ASIC Audit Inspections: The increased percentage (29%), up from 8% in the previous ASIC reporting cycle and 5% in the cycle before that, can be attributed to a reduction in the number of files reviewed by ASIC, a reduction in the key areas reviewed within those files and one extra finding this year compared to last.

  12 months to
30 June 2019
18 months to
30 June 2018
18 months to
31 December 2016
18 months to
30 June 2015
Number of files reviewed 2 3 4 6
Number of key areas reviewed 7 12 19 26
Number of key areas with findings 2 1 1 2
% of key areas with findings 29% 8% 5% 8%

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