Audit firms are producing poor reports – ICPAU

Accounting: A calculator. Large companies (corporates) hire external auditors to review their books of accounts. FILE PHOTO  

By MARTIN LUTHER OKETCH

Audit firms in the country are still producing poor audit reports, tarnishing the image of local audit firms, a survey by the Institute Certified of Public Accountants of Uganda (ICPAU) on the quality of
audit firms, has shown.

To reverse the situation in poor auditing, the ICPAU - the steering committee on audit, says the audit firms must put in measures which enable them to conduct proper auditing and produce quality audit reports.

Presenting the committee’s survey results during the accountants Practitioners’ Forum held at Imperial Royale Hotel recently, the managing Partner of Jim Roberts & Associate, Mr Julius Tumuhimbise who is a Certified Public Accountant (CPA), said the Institute’s Audit Quality Review team has made a number of revelations within the ongoing fourth audit quality review cycle during which a total of 181 audit firms were surveyed.

“We found out there is lack of partner input; limited appreciation of technical and documentation requirements; failure to devote sufficient time and attention to planning the audit, lack adherence to audit procedures,” he said.

Other reasons
Mr Tumuhimbise said the other reasons why the local audit firms in Uganda perform poorly are: lack of standardised audit programmes which lead to inconsistency, the inappropriateness of staff turnover; and poor quality control measures at the firms and engagement levels.

The Audit quality report refers to matters that contribute to the likelihood that the auditor will achieve the fundamental objective of obtaining reasonable assurance that the financial report as a whole is free of material misstatement; and ensure material deficiencies detected are addressed or communicated through the audit report.

The audit quality report, which feeds into companies’ quality of financial reports is key to informed markets and investors.

Large companies (corporates) hire external auditors to review their books of accounts. These auditors eventually provide independent reports to the company directors. An independent audit provides confidence in the quality of financial reports.

“The committee has suggested that ICPAU has to put up more stringent sanctions for firms with consistent low quality work put clear remediation plans to assist firms improve on audit quality.

Technology
Associate Professor School of Law School of Makerere University Winfred Tarinyeba Kiryabwire said the use of technology in accounting creates effectiveness and transparency in the auditing process and it enables businesses (companies) to become more efficient.

“However, the manual work of accountants will still be required in specific areas like analysing and advising the companies on matters regarding their financial position, where they need to improve, whether they are borrowing so much,” Ms Kiryabwire said.

DISRUPTION

The president of Institute of Public Accountants of Uganda, Mr Fredrick Kibbedi said the Institute will continue putting in place measures that ensure audit firms have enough staff to produce quality audit reports.

Mr Kibbedi said the ways of conducting auditing process are changing so fast and the accountants need to keep learning new ways of accounting procedures to produce quality audit reports.

With the advancement in technology, worldwide the accountancy profession is currently experiencing massive disruption arising from the applications of Information Communications Technology to perform the work of accountants.

Addressing the accountants on the topic on Technology, Trust, Ethics & Accountability: The Power of a Trusted Business Advisor’ a member of the International Ethics Standards Board for Accountants, IFAC who is also Associate Professor School of Law School of Makerere University Winfred Tarinyeba Kiryabwire said Artificial Intelligence (AC) Machine Learning (ML) Robotic Processors Automation (RPA) Blockchain are being used to conduct accounting procedures these days.