Bangkok, May 27, 2014 ? The SEC revealed audit inspection results on eight audit firms; citing all of them met quality requirements. The result, however, showed room for improvement in the area of engagement performance, if improved will heighten their efficiency and bolster investor confidence in the Thai capital market.
     
The SEC?s audit inspection in 2013 covering eight audit firms indicated that every firm  passed the six key elements with highest average score in the area of client acceptance and continuance (A&C) where most firms already have in place engagement acceptance procedures that take into account risks of client and technical competency and level of relevant experience of audit staff. Meanwhile, deficiency was found on engagement performance (EP) with lowest average score, resulted from insufficient involvement of engagement partners and engagement quality control reviewers (EQCRs) and incomplete audit manuals as required by quality control standard. Findings by respective average scores and recommendations are summarized as follows:

(1) Client acceptance and continuance (A&C): Some audit firms may need to improve A&C by requiring consideration on all significant information before accepting any audit engagements; assess the firms? adequacy of human resources with sufficient skills, knowledge, and capabilities to deliver high quality audit work; and improve risk assessment criteria to ensure proper discretion;

(2) Human resources (HR): Deficiencies were persisted in some audit firms concerning inappropriate human resources allocation and inappropriate performance evaluation criteria.  Assigning competent audit staff to each engagement as required by auditing standards and determining performance evaluation criteria to reflect performance quality could help improve the deficiencies; 

(3) Ethical requirement (ER): Compliance in this area was found insufficient in some firms, such as inadequate independence compliance testing due to the findings on incomplete identification of related parties and lack of appropriate client acceptance procedures on non-audit service acceptance decisions. Setting proper procedures to identify impacts on independence and possible conflicts of interest was recommended to deal with the said insufficiency;  

(4) Monitoring (MR): Some audit firms were found having insufficient monitoring and without action plans to monitor deficiency remediation. In this regard, they were recommended to establish monitoring process and procedures to cover all important aspects of the auditing standards, including analyzing causes of such deficiencies and preparing remediation plan to follow up rectification of those deficiencies;

(5) Leadership responsibilities (LD): Overall, despite leaders of audit firms? reinforcement of the importance of audit quality, deficiencies remained in many aspects. The findings demonstrated that firm leaders should strictly require their staff concentrate on the implementation of the quality control policies effectively and consistently across engagements;

(6) Engagement performance (EP): Insufficient involvement of engagement partners and EQCRs was found with inadequate and improper audit manuals, such as audits of high fraud risk areas and group audit. Accordingly, involvement of engagement partners and EQCRs must be elevated to attain high audit quality, coupled with updating audit manuals and audit programs according to the auditing and accounting standards as well as providing necessary training for its staff.

Thawatchai Kiatkwankul, Director of Accounting Supervision Department of SEC said that ?Accounting professions such as accountants and auditors play a crucial role in giving investors a rise to signal irregularity in a company through its financial statements. In particular for sizable listed companies and securities companies involving with complicated transactions, audit works need competent audit teams under quality assurance system. To lift up confidence in the Thai capital market, audit firms should place priorities on rectifications of deficiencies in every element by analyzing the root causes and identifying clear solution and implementation guidelines.?