WHAT IS PRACTICE REVIEW?

This is a quality assurance process to monitor whether audit firms have the quality control policies and procedures in place to comply with professional standards and legal requirements. It is compliance-focused.
The Institute usually appoints at least two practice reviewers for quality review of a firm. The reviewers examine the quality control policies and procedures used by the firm in carrying out its audit engagements. The reviewers cover the following elements of quality control, as set out in NSA 3 and NSQC 1:

  • Leadership responsibilities for quality within the practice
  • Relevant Ethical requirements
  • Acceptance and continuance of client relationships and specific engagements
  • Human resources
  • Engagement performance
  • Monitoring
  • Documentation of the System of Quality Control

The reviewers achieve the above by:

  • Examining the practice’s manuals, working papers and other documents to evaluate adherence to professional standards, regulatory and legal requirements
  • Selecting a cross-section of recently completed engagement files to assess whether the quality control procedures are being implemented.

At the end of the exercise, the reviewers submit their reports including their observations and recommendations to the Institute.

The Institute then writes to the firms reviewed, attaching a copy of the practice review report and  requesting for a detailed action plan to rectify each of the weaknesses observed during the review.

WHO ARE PRACTICE REVIEWERS?

These are members of the Institute with at least five years experience in audit practice appointed by the Institute after interview by the Professional Practice Monitoring Committee (PPMC).

MEMBERSHIP OF PROFESSIONAL PRACTICE MONITORING COMMITTEE (PPMC)

This Committee is made up mainly of some members of the Institute with vast audit experience. The following are the terms of reference given to this Committee by the Council of the Institute:

 

  1. To monitor compliance with accounting and auditing standards by members and  advise

members in practice of any shortcomings;

2.  To ensure that regular practice review of members’ practices are carried out;

3.  To provide practical help and guidance on technical matters to members with a view to
enhancing the efficiency of members’ performance;

4.  To make recommendations to Council on desirable changes to the Institute’s Rules and
Regulations regarding professional practice;

5.  To review and comment on accounting standards and exposure drafts.

 

WHAT ARE THE BENEFITS OF BEING REVIEWED?

One of the benefits of having a firm reviewed is that it affords the practitioners the opportunity to  exchange ideas with the reviewers about recent developments in practice. Secondly, it identifies  the weaknesses observed in the review which in turn the firms reviewed are expected to correct thereby preventing them from sliding into incompetence, obsoleteness and irrelevance.
The review help the Institute to obtain information on the challenges faced by firms thereby assisting the Institute to serve its members better.

GUIDELINES FOR MERGER OF FIRM

This document provides guidelines to be adopted by small- and medium-sized audit firms that may be contemplating the merging of their practices.

GUIDE TO PRACTICE MANAGEMENT OF SMALL- AND MEDIUM-SIZED AUDIT FIRMS

This document was adapted by Professional Practice Monitoring Committee of the Institute of Chartered Accountants of Nigeria (ICAN) from “Guide to Practice Management for Small- and Medium-sized Practices” prepared by the Small and Medium Practices Committee of the International Federation of Accountants (IFAC). It is a comprehensive manual designed to assist   or guide small- and medium-sized firms in delivering high quality services to their clients.

NIGERIAN STANDARDS ON AUDITING (NSAs) & NIGERIAN STANDARDS ON QUALITY CONTROL 1 (NSQC 1)

The Nigerian Standards on Auditing (NSAs) and Nigerian Standards on Quality Control 1 (NSQC 1) were adapted from IFAC’s International Standards on Auditing (ISAs) and International Standards on Quality Control 1 (ISQC 1) respectively. The provision of these standards is in line with the Institute’s commitment to the Federation’s broad mission of  worldwide development and enhancement of an accountancy profession with harmonized standards, able to provide “services of consistently high quality in the public interest.” 
At present, the Institute has adapted and developed thirty-six (36) NSAs which are to be applied in the audit of financial statements and other related services.
The NSQC 1 deals with a firm’s responsibilities for establishing and maintaining a system of quality control to provide it with reasonable assurance that the firm and its personnel comply with professional standards and applicable legal and regulatory requirements.

PRACTICE MONITORING OF AUDIT FIRMS

The Institute commenced practice monitoring of firms of its members in October, 2009 in phases. Phase 4 of the exercise was concluded in November, 2011 while phase 5 will commence in the first quarter of 2012.

The cost of practice monitoring exercise is currently being borne by the Institute and efforts are being made to ensure that all parts of the country are covered.  The firms are not being punished for their weaknesses but appropriate disciplinary actions will be taken imposed where the firms fail to make required improvements.

© 2012 www.icanig.org /  The Institute of Chartered Accountants of Nigeria. All Rights Reserved.

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