Annual Report 2016

Financial Audit | FAOA 2016
13
Firm Review
The absolute and average number
of findings per inspection at the five
largest and at the smaller audit firms
continue to decline compared to prior
years. This may be due to the relative
consistency of ISQC 1 requirements
and the increased awareness
of those responsible for quality. With
respect to the five largest audit firms,
it should be noted that the FAOA focuses
on file reviews in the intermediate
years between PCAOB inspections
in Switzerland. This has led to a
reduction in the number of firm-level
findings in such cases. In the year
under review the average number of
firm review findings per inspection at
the smaller audit firms was around
three times as high as at the five largest
audit firms. This is despite the fact
that the quality assurance systems of
the smaller audit firms are less complex
than those of the five largest
audit firms, the circumstances being
simpler. Nonetheless, the standard of
quality assurance systems can generally
be described as good.
business year are to be reported per
30 June. The non-audit services provided,
together with the independence
safeguards put in place, are to
be disclosed for the reportable engagements.
As per 30 June 2016, the
FAOA had received four reports (prior
year: 12 reports), which were critically
assessed and, depending on the situation,
taken account of in the respective
file review strategy.
The 2016 file review findings for the
five largest and for the smaller audit
firms are shown by category in the
figures below 5 .
File Review
A total of 25 (prior year: 19) file
reviews were conducted and completed
in 2016. The 13 inspections
resulted in a total of 57 findings.
The number of findings per file review
thereby fell pleasingly from 3.1
to 2.3 compared to prior year. Specifically,
the values at the five largest
and at the smaller audit firms
fell from 2.9 to 2.4 and from 3.8
to 2.1 respectively. With respect to
file reviews, audit quality is heavily
dependent upon the partners and
staff involved, as well as the external
environment. Audit firms should
hence continue to focus on the consistency
of audit quality.
Under the requirements of Circular
No. 1/2010 4 , those audit engagements
for which the ratio of non-audit
to audit fees exceeds 1:1 in a
4 FAOA Circular 1/2010 of 31 March 2010
on the reporting of state-regulated audit
firms to the oversight authority, section 22
letter b.
5 For comparability purposes, findings that
relate to Swiss Auditing Standards or US
auditing standards have been allocated to
the identical or comparable ISA.