Concluding our three-part series on Audit Hot Topics for 2026, last week and the week before we looked at some of the main areas that are topical at the moment. This week we look at a further tranche of issues to remind auditors as the audit season for SME entities commences.
Independence issues
Common pitfalls around audit independence include situations where:
- Individuals within firms, or entities related to the audit firm act as company secretary to audit clients or as trustee for a trust with a material interest in an audit client; and
- non-audit services provided on a contingent fee basis (normally linked to capital allowances claims, research and development tax claims or similar work) are provided.
SoQM
So that a System of Quality Management (SoQM) can be effective it needs to include:
- appropriate administrative and accounting procedures;
- an internal/external quality control process (typically hot and cold file reviews);
- effective procedures for risk assessment, and
- effective control and safeguard arrangements for the information processing system used by the audit firm i.e. data security.
If your firm needs assistance with its SoQM implementation and compliance with the ISQM 1 standard, please see our website store for the ISQM Toolkit.
Audit evidence and documentation
Many of the audit cold file review findings relate to documentation weaknesses. A very useful guidance document was published by the Chartered Accountants Ireland in March 2026 called ‘Guidance for audit evidence and documentation’ which will be a great help to audit teams to improve their audit documentation.
Our audit file review service is available either on-site or remotely where we will provide you with a written report benchmarking your audit file against the appropriate standards. You will receive a gap analysis of where your firm stands on a particular assignment within clear direction as to appropriate action to consider for improvement.
For those of you still in the process of ISQM 1 implementation, please see our ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please call or e-mail John McCarthy FCA or e-mail him at john@jmcc.ie.
We typically tailor training and brainstorming sessions to suit each firm’s unique requirements.
Publications and AML webinar:
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- The ISQM TOOLKIT 2022 is available to purchase here.
- See our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- Also we have an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
- To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
