The aim of this document is to set out the scope of the various engagement types that Mercia can provide for your firm. While not an exhaustive list, we have endeavoured to cover the most common types of review along with the usual scope of the reviews.
Having said that, at the start of each visit, the consultant will confirm the scope of the work with the firm. If the firm has any concerns or would like to amend the scope of a planned review, they should contact us as soon as possible.
In terms of all our review services, the following points apply:
All reviews are followed by a detailed written report of the findings. This is sent to the firm using our Secure Document Exchange (SDE).
The aim of a cold file review is to assess the quality of the audit work carried out and to see how well the practice has followed its own standard procedures. For each review, we will need to see the following documents:
In order for us to assess the work of the firm, the reviewer will usually select a file(s) from a list of audit assignments that have been finished since the previous review. The list should indicate who was responsible for the assignment so that we can cover a cross-section of partners and staff.
Generally, two audit engagements will be reviewed during each day of the visit, however this can be varied, depending on the size and complexity of the files and the nature of the review the firm requires.
It is our aim to complete the review before the end of the visit so that we allow an hour to discuss our findings with the relevant individuals.
The reviewer will review the assignment that is sent to the location we agree. If the files are on paper, you are responsible for covering the costs of transporting the files to us and returning them to you after the review. If the files are electronic then they should be sent to us via our SDE. Please note that if the file is not received by the date and time stated, we may not be able to complete the review by the agreed date.
Once the reviewer has finished looking at the firm’s work, they will ring the firm for a short (15 minute) discussion of the findings.
A hot file review is a review of an audit file prior to the accounts being finalised and the audit report being signed, to assess the adequacy of the work and the evidence of compliance with required standards. It is important that the files to be reviewed are as complete as possible, as this should reduce the number of outstanding points that will be included in the report.
Ideally, all audit work should be recorded, the partner should have reviewed the files, and all queries should have been cleared. The accounts should be complete and in a form that could be sent to the clients for approval. The only points that are likely to be outstanding are obtaining a signed letter of representation and, obviously, the client and auditors will not have signed the accounts.
In order to complete the review, the following points must be complied with:
At the end of the review, the reviewer will take time to discuss the findings with the relevant people and confirm the work required to bring the file to an acceptable standard.
The reviewer will review the assignment that is sent to the location we agree. If the files are on paper, you are responsible for covering the costs of transporting the files to us and returning them to you after the review. If the files are electronic then they should be sent to us via our SDE. Please note that if the file is not received by the date and time stated, we may not be able to complete the review by the agreed date.
Once the reviewer has finished looking at the firm’s work, they will ring the firm for a short (15 minute) discussion of the findings.
Unless otherwise instructed, our review will consist of a review of the procedures that you have undertaken, to confirm that these have been undertaken in accordance with ICAEW Technical Release 09/16AAF Revised Arrangements for ATOL Reporting Accountants reporting to the Civil Aviation Authority (CAA) and the applicable sections of the CAA’s Guidance Note 10 Requirements for ATOL Reporting Accountants.
We will report on areas where the work is insufficient and whether opinions and confirmations appear reasonable in the light of the evidence obtained.
Our review will not encompass any ‘true and fair’ audit or other work carried out for the client under review and we will not be implicated in any way in the final report(s) given to the Civil Aviation Authority (CAA), which remain your sole responsibility. Our comments will be restricted to whether the report(s) given to the CAA are supported by the information contained in the working papers.
This work can be performed as either a cold (after the accounts and report have been signed) or hot (before the accounts and report have been signed) review service.
Audit regulation requires a registered auditor to monitor compliance with the regulations at least once a year. The results from our review may be used when completing your Annual Return. In order to carry out such a review effectively, there are a number of documents we will need to see, and this will be communicated to you as part of the visit confirmation process, but as a guide, we will usually review the following areas:
If the audit team have already planned the audit, we will spend an hour or so going through the planning documents you have prepared. We will then have a meeting with the audit partner, manager and any other members of the audit team whose contribution would be useful. During this meeting we will discuss how effective we think the preliminary planning has been, identify areas that require more thought, and point out areas where we think the audit time could be saved by using a more effective approach or reducing the time allocated.
If the audit team has not carried out any preliminary planning, we would like a meeting with the audit partner, manager and any audit staff who may have an input into the planning process. We will talk through the planning documentation and the areas or issues that the team will need to focus on during the audit.
Our aim is to enable the audit work to be carried out compliantly, effectively and efficiently, reducing unnecessary work and ensuring that high risk areas are given appropriate focus. We also need to ensure that all areas of the International Auditing Standards are covered.
There will be no written report following the visit, but we will be happy to leave draft notes with the audit manager if that would be useful.
The aim of an audit efficiency review is to identify any areas where the audit work could have been performed more effectively or where a more efficient approach could have been applied.
The review will include consideration of how effectively your audit system or software has been used and, where appropriate, suggest improvements.
We will also inform you of any technical shortcoming in the audit work identified during the review. However, as the focus of the review is on the efficiency of the audit approach, the review cannot be relied upon to identify all technical issues.
This review will focus on the efficiency of your audit work, so it would be helpful if you highlighted some jobs that recover poorly and would gain most from an improved approach. Alternatively, we can select files from a list of bills or audit clients.
The scope of this kind of work varies between firms, however the focus will depend on the findings from previous reviews, the size of the firm and any concerns the firm has over the monitoring visit.
This review will focus on the efficiency of your accounts preparation work. It would be helpful if you highlight some jobs that recover poorly and would gain most from an improved approach. Alternatively, we can select files from a list of bills or clients.
The aim of the review is to confirm that the accounts production work is of a suitable standard and follows the firm’s own procedures. We will also review the approach to the work to comment on the efficiency.
The purpose of a tax file review is to assess your firm’s procedures for self-assessment for individuals and companies. The review will also give you a chance to discuss technical issues that are relevant to your firm and its clients. To do this, we would like to see copy bills from which to select tax work to review.
It is our aim to complete the review by 16:30 so that we can discuss our findings with the tax partner and relevant senior staff.
At this visit we will chat informally with each member of staff who will be attending any of our staff courses and discuss the work experience they are currently being given, their progress with their studies (if applicable) and Mercia courses attended during the year. This discussion will enable us to plan the person on the relevant courses for the forthcoming year and give qualified members of staff the opportunity to plan their CPD ahead, ensuring maximum benefit is gained by attending relevant courses only.
In addition, our review should be seen as an opportunity for members of staff to discuss any personal issues that could be affecting their performance in the office, or any other matters of concern relating to the practice itself. We would be grateful if staff could remember to bring in their completed training records (if applicable) so that we can review them and discuss any questions that they may have.
At this visit, we would like to discuss with you the training requirements of each partner and member of staff, based on the type of work they perform and their level of experience/qualification. This information will then be used to plan a suitable course programme for the year.
Whilst the reviewer will bring a courses brochure with them, it may be beneficial for partners and staff to review the Mercia courses available before the visit; the reviewer will then be able to answer any questions on the day. If you require more copies of the course brochure, please let me know.
The onsite visit will be followed by a marketing report and 3 follow up phone calls during the year.
The purpose of a practice management review is to look at procedures currently in place for managing your practice and suggest ways in which these can be improved.
In order to prepare for the visit, it would be helpful if you could send us an outline of the areas of the practice that cause you particular concern or issues you feel most need to be addressed. Please let us have this and any other relevant information at least two weeks before the review, if possible.