NFRA introduced Guidelines for Audit Quality Inspections

The National Financial Reporting Authority (NFRA) published its audit quality inspection criteria as a step toward enhancing the calibre of the audit profession. The inspection guidelines are consistent with the finest procedures used by international audit regulators.

The operation of independent audit regulators around the world is actually dependent on audit quality inspections. The International Forum for Independent Audit Regulators (IFIAR), which is made up of independent audit regulators from 54 different countries, mandates that audit regulators at the very least conduct routine inspections of audit firms that are conducting audits of public interest entities in order to evaluate compliance with the relevant professional standards, independence requirements, and other rules, laws, and regulations.

Additionally, many stakeholders suggested that NFRA conduct onsite audit firm inspections in response to the consultation paper “Enhancing Engagement with Stakeholders” in 2021. This would allow inspection teams to become familiar with the systems and procedures used by audit firms as well as allow audit firms to comply with auditing standards, guidelines, etc. when conducting audits.

The goal of NFRA inspections is to find areas and chances for the audit firm’s quality control system to be improved. Inspections will include a firm-wide assessment of audit quality (SQC 1) and test-and-check evaluations of individual files to gauge the degree of adherence to applicable auditing standards, quality control procedures, and policies. Inspections are distinct from investigations by nature, according to NFRA. The test-check by the inspection teams may, however, in some circumstances serve as a foundation for enforcement or an investigation in accordance with applicable Act and Rules provisions.

Audit quality inspections will give the audit firms a chance to receive comments and make necessary course corrections while also creating a broader awareness among all parties of the principles and practises underlying audit quality management. The goal of the inspections is to fundamentally enhance the nation’s overall financial reporting framework.

For Official Guidelines Download PDF Given Below: