The UK regulator Financial Reporting Council (FRC) is an independent body responsible for monitoring the quality of major local audits revealed “significant weaknesses” in the BDO audit team’s documentation, archiving and engagement. It emerged that a member of the team working on a VfM (Value for Money) audit changed an audit file of an unnamed public body after they were notified of the regulator’s inspection.
What lessons can we learn?
- Correct and diligent documentation of work performed for all engagements is always first price. Building a file with evidence and documenting professional judgments is key.
- Archiving files: the auditor was able to change the working papers because the files were not archived. In this case BDO had a policy in place for financial statement audit engagements, but it did not at the time include all types of engagements, such as VfM audits.