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Home > About us > What we do > Audit of financial statements > Audit Approach

Audit of financial statements

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 and pension schemes.

 

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 review of the staffing of audits to ensure that there are no conflicts of interest or other similar matters arising.

 

We follow the guidelines set out by the APB and ensure that all Directors and Audit Managers are rotated at least every five years while team leaders and below are rotated at least every three years.

 

Relationships with clients

 

We aim to maintain and build on the existing good relationships which we have with our audit clients.

 

We provide advice and guidance where appropriate and provide an annual accounting update (link) which summarises changes in public sector accounting.

 

We also provide clients with access to our disclosure checklists which enables 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.

 

This external review is currently undertaken by the Quality Assurance Directorate from the Institute of Chartered Accountants in England and Wales (ICAEW). 

 

Quality Assurance Review 2009 - Executive Summary

Quality Assurance Review 2008 - Executive Summary