FAQ's on Inspections / Practice Reviews
Yes, you will receive a AFRC Inspection notification even if you are practising under your own name. In fact, a lot of our AFRC Inspection consultancy enquiries are from sole practitioners.
No. The Inspection Committee has the discretion to refer the case to the Disciplinary Panel against a Practice Unit for significant negligence, even if it is a first-time inspection.
We have summarised some of the common documents that would normally be requested during the AFRC Inspection. This is not an exhaustive list, and the AFRC Inspector may require additional documents / information during the AFRC Inspection process
- Client list for audit reports issued in the 18 to 20-month period prior to the site visit
- Quality Assurance Manual and Anti-Money Laundering Procedures Manual and documentation to support their ongoing compliance
- Selected audit engagement files for review (usually 2-3 engagements)
- Monitoring review report(s) and completed file review reports
- Organisational chart of the Practice
The AFRC Inspector is more likely to select the following engagements:
- Highest-fee engagement in client list
- Regulated entities / high-risk engagements
- Engagements previously reviewed by the monitoring reviewer
The inspection site visit will usually take 3 days for 1 reviewer, or 1-2 weeks for a AFRC inspector, but the entire review process might take approximately a few months, or even longer. Often, if a inspection unit’s first submitted audit file is not up to standard, the inspector has the sole discretion to select more files for review.
In our previous article “5 Ways to Smartly Prepare for a Practice Review” we gave some tips on preparing for a AFRC Inspection. Compliance is not an objective that can be achieved within a short period of time, and it requires your ongoing attention.
Do not wait till the last minute. We plan our work in advance and we would often decline last-minute engagements.
EQC helps your Inspection address AFRC Inspection findings by devising detailed remedial action plans to demonstrate your Practice’s commitment to rectify past mistakes and respond to deficiencies and findings identified by the AFRC Inspectors.
We can help your Inspection draft effective written responses to the QAD, revise your AML and Quality Control Manuals and advise on ways to improve your quality control systems and AML compliance, provide custom-made working paper templates that specifically address the deficiencies identified in the practice review and provide online training that specifically address your findings, as well as helping your Practice to implement these newly revised working paper templates in your other similar audit engagements to prove to the QAD that you are dedicated to improving the quality of your future audit engagements.
We can help review the issues raised by the Committee and the council, and devise remedial actions your Inspection can take, and review and advise on written responses to AFRC or council members, addressing each issue raised. We can also assist in the negotiation process through non-prejudice meetings with the AFRC, mitigating the potential sanctions against you and your inspection.
If your complaint proceeds to the disciplinary committee, we have legal advisors with a wealth of experience participating in negotiations, mediations and legal proceedings initiated by the AFRC. These advisors have successfully defended in some recent cases that involved the alleged integrity and professional misconduct of some practitioners at international big four firms, 2nd tier CPA’s as well as local small and medium sized practices.
After the inspection visits, an exit meeting will be held. Usually, a few weeks after the exit meeting, a draft practice review report is issued, and your practice is expected to provide written responses within 21 days from the date of the draft report.
Practices that successfully close file will need to demonstrate the following points:
- Having very few significant Inspection findings
- Being responsive and cooperative with the inspection teams, including making all information and documents requested available for reviewer within reasonable time frame
- Demonstrating commitment and capability and resources to improve quality of your Practice and compliance with professional standards
- Devise remedial action plans responding to deficiencies identified during the inspection, that show commitment to act upon them in a timely manner
Remedial actions could include attendance of training courses to brush up knowledge on the latest standards, or recapping on best audit practices, revising quality control systems to improve effectiveness of the overall control environment, and revising audit procedures and working paper templates for future engagements.
In cases where your case file is not closed, the QAD may request a follow-up visit usually 6 months following the issuance of the draft report and may request the submission of another monitoring review report by an external reviewer.
No. It is very possible for small Practices with only SME-FRS engagements to have multiple significant findings on their reviewer’s report.
It is highly recommended that your Practice maintains good standards of quality control procedures, audit engagement quality, compliance to professional standards and AML guidelines, as well as improving your staff performance and expertise so they don’t’ waste time doing the unnecessary.
Our practice protection plans are specifically designed to prepare your Practice for future AFRC Inspection, which include monitoring reviews, updating and revising of QAM and AML manuals, guidance of AML sanction checks, custom-designed working paper templates, audit training courses, and more depending on the plan