Audit approach
International Standards on Auditing
Our audit of financial statements is carried out in accordance
with International Standards on Auditing (UK & Ireland) issued
by the Auditing Practices
Board (APB).
Our staff are professionally qualified or are under training
and, with a range of sector experience, we are able to provide
multi-disciplinary skills.
Our audit teams can also call on in-house specialists including
IT auditors and experts in particular sectors such as charities,
pension schemes & companies.
Our approach to the audit of financial statements uses a range
of techniques to obtain audit evidence and assurance and is based
on a thorough understanding of the client's business.
This understanding allows us to develop an audit strategy which
focuses on addressing specific risks whilst providing an acceptable
level of assurance across the financial statements as a whole.
We are able to tailor our work to meet the needs of, and risks
faced by, individual clients and the approach will be designed to
add value to the client.
Our understanding of the business, risk assessment and controls
review processes provide the opportunity for positive and
constructive feedback through sharing our analysis of risk, and the
effectiveness of risk management and control systems. This enables
the NAO to contribute towards improving financial reporting,
financial management and corporate governance processes not only at
entity level but across the public sector.
Independence, objectivity and integrity
The NAO has strict procedures in place to ensure our
independence, objectivity and integrity including an annual
declaration by staff which identifies any potential conflicts of
interest or other similar matters arising.
As recommended in the APB’s ISQC 1:
Quality control for firms that perform audits and reviews of
historical financial information, and other assurance and related
services engagements, Directors are rotated to ensure
independence from the client being audited. The NAO has adopted a
policy of up to 5 years between rotations.
Relationships with clients
We aim to maintain and build on the existing good relationships
which we have with our audit clients.
We also provide clients with access to our disclosure checklists which enable them to
ensure that their financial statements are disclosed in accordance
with the FReM, Companies Act and other requirements.
Quality
Quality is strongly embedded in the NAO culture and we have well
established review procedures to ensure that audit work is
undertaken efficiently and in accordance with International
Standards on Auditing.
These procedures include internal peer reviews prior to
certification of the account as well as an annual post
certification review of a sample of audits and procedures.
Additionally the NAO’s audit and firm wide procedures are
reviewed annually by the Audit Inspection Unit of the Financial Reporting Council (AIU). The
first report of the AIU on the NAO is expected to be completed in
May 2010.
Prior to AIU’s review, an external review was undertaken by the
Quality Assurance Directorate from the
Institute of Chartered Accountants in England and Wales
(ICAEW). Below are the executive summaries from the most recent
reviews: