Quality assurance for the auditor : policies and procedures for the auditing profession in Malta

Abstract

As service providers, the auditing profession has strived to gain a positive public opinion by offering qualitative services and in particular a high quality audit. However no mechanism exists that assures that an audit is carried out in compliance to all standards and regulations. Quality assurance is the profession's principal means of demonstrating to the public and to regulators that auditors are performing at a level that meets the established auditing standards and ethical rules. It also allows the profession to encourage quality improvements in auditing methods. The local authorized accounting bodies have now an obligation, set by the EU and IF AC, to establish quality control policies and procedures and to introduce a quality assurance system designed to ensure that its members in public practice are subject to external review. An analysis of the requirements on quality assurance systems and public oversight in the EU and also internationally was necessary to obtain a better understanding of the system that will be implemented in the locally. To this effect, the UK monitoring mechanisms were examined closely to be able to determine how their system operates. The ultimate objective of this study was to discuss the impact that a local quality assurance system involving an external review would have on professional accountants. Based on a number of interviews with the authorized accounting bodies and practitioners covering a sample of auditors of different size, the study attempts to establish: • how such a system would operate, • how will practitioners be affected, • identify any pitfalls which are likely to be encountered and suggest possible solutions. The information gathered served to establish the important roles and responsibilities that both the MIA and Accountancy Board will have in the implementation of this system. Amongst all those identified there is the choice of the right inspectors, which is crucial for the system to be successful in all respects. On the other hand it appeared that the smaller practitioners will be more affected by the system. They will need to change their technical way of working to include updated checklists and more evidenced procedures, which will definitely increase their costs. However this will be an opportunity to become more qualitative and thus more competitive. The system will ensure a form of control over the less desirable sector of the local profession, which was not controlled in such a coordinated manner.