5 Ways to Smartly Prepare for a AFRC Inspection
Yes, we have been there, the dread of receiving the Practice Review Notification, or a AFRC Inspection notice, that’s why we absolutely understand the troubles and extra strain on resources that a Inspection may bring upon. Worry no more, the EQC is here to alleviate that burden and help you smartly prepare for a Inspection. Let’s get started!
1. Appoint external monitor reviewer
It is strongly advised that you should appoint a qualified consultant as an external monitor reviewer in a bid to keep track of quality control procedures and make sure they are up to par at least annually. Not only can a decent monitor reviewer help spot discrepancies or flaws, he/she can also save you a lot of costs in terms of manpower, time and unnecessary efforts spent on compliance. Before doing so, as a safety precaution, you should always make sure the newly appointed monitor reviewer has authentic qualifications and the competence to perform reviewing duties.
But, how do we know if the appointed monitor reviewer is the RIGHT person to do the reviewing? First, the appointed monitor reviewer needs to be a certified public accountant who has experience in doing audit & assurance compliance & managerial work. Second, the appointed monitor reviewer needs to be familiar with the latest Hong Kong Financial Reporting Standards and is vigilant of the latest common findings from recently completed inspections, and their audit engagements that were similar to yours. Last, the appointed monitor reviewer should be able to provide pragmatic and insightful recommendations to your firm from the findings.
2. Keep the team updated and shape them up
Strictly abiding by the Quality Assurance Recommendations and AML manual procedures is without a doubt the best way to prepare for a Inspection, yet it is also equally important to keep the team abreast of any possible alterations on those two documents, just so you are not adhering to obsolete standards or performing unnecessary steps and wasting your precious resources. In addition, perform annual self-assessment on compliance with Quality Control to have a better grasp of compliance ideas
To facilitate audit work among the team, try using easy-to-follow procedures and existing working paper templates instead of coming up with your own protocol to save time and efforts. What’s more, you should teach your team the concepts and rationales of audit work and procedures, and how to perform audit work efficiently and practically. Should you devise any new procedures pertaining to Audit Work, they should always achieve the following 4 objectives all in one go. First, they should help employees save time on work; second, they should help the firm cut unnecessary costs; third, they should improve the overall efficacy of quality assurance; and finally, they should help protect the practitioner’s reputation.
3. Check for breaches, you can never be 'too careful'
Plain and simple, make every endeavour to uphold AML standards within the firm and among your clients such that the possibility of having breaches in the AML guidelines and risking possible disciplinary actions from the AFRC can be eliminated. Moreover, as the AFRCmay well release updates on AML practices, you are also advised to exercise extra discretion on your operations to cope with possible enactment of new guidelines pertaining to AML.
4. Perform periodic quality compliance checks and motivate your team (in the proper way)
On the other hand, employee performance-wise, it is vitally important that management strives to maintain high performance standards among employees with Key Performance Indicator (KPI) that encompasses both the revenue they have contributed and quality of their audit work, such that the firm’s longevity is sustained via conscientiousness and quality in work and not just by mere revenue-generating.
Second-partner reviews may have already been considered to be a ‘common’ practice among International renowned CPA firms. Nevertheless, to small & medium sized practices that currently lack the actual resources to afford having a second-partner, such ‘common’ practice is improbable if not impossible to be carried out. Thus, employees’ KPI becomes ever more important in assessing whether or not they can contribute quality audit work independently with limited resources and third-party training provided.
Hence, we as the EQC are also offering to provide quarterly or semi-annual sample-checking reviews on the audit file put forward by your employees based on our very own professional set of KPI. In these reviews, we strive to identify common avoidable errors in working papers, and areas with inadequate documentation and audit procedures. Moreover, we will assist you in developing proper training materials or more so, provide training to your staff which will be conducive to their audit performance in the future, they will be advised and taught to perform the necessary with efficiency and quality.
5. Recognize the importance of proper documentation
As we know, audit programs and documentation involve tedious yet necessary justifications upon justifications, and it is in such context that English proficiency of your employees plays a pivotal role in whether or not your audit reports can provide well-written and well-substantiated audit conclusions.
For small & medium sized practices, it is quite improbable for all employees to possess decent English proficiency and can professionally compile your audit files with precision. Therefore, very often audit inefficiencies that stem from a lack of English proficiency from employees would arise and pile up, subsequently dragging you behind on your progress and exacerbating the stress on your team.
To help deal with this obstacle, the EQC analyzes your audit work and provides tailor-made, bullet-point advisory guidance to your employees on audit working papers with the necessary language and professionalism. Upon completion, your team will have been acquainted and be equipped with the essential skills and knowledge pertaining to auditing and documentation, ensuring that both existing and future audit inefficiencies can be eliminated once and for all.
With all that said, what EQC wants to offer you
We are now offering a Mock FRC Inspection package, which will encompass holistic audit advisory services such as monitoring reviews, quality assurance checks, audit training, hypothetical audits with working paper templates, and consultancy on the inspection process and potential questions that will be asked by reviewers, and all the essentials that will help you best prepare for a FRC Inspection.