View Full Version : Unadjusted errors
I would be interested in any opinions here.
When a job involves both the preparation of accounts and the subsequent audit (as naughty as that may be...) I believe that it is unacceptable to leave known errors unadjusted, regardless of materiality (and ignoring trivialities).
Does anyone agree or disagree?
Jaydee
6th July 2009, 13:14
I agree.
Of all of my audits, only one prepare their own accounts.
Of all of the others, despite having a materiality level higher than some of the journals, we would routinely adjust the accounts as we go.
The accounts are then more accurate, and it is often easier to put the journal through than to complate the unadjusted errors schedule!
I have a Big Four firm who seems to have a problem with this. (They audit the parent, I audit the subsidiary).
Can anyone suggest why?
GaryMc
6th July 2009, 13:46
Because adjusting errors that aren't material takes time and therefore eats into their budget.
Big 4 audits are very materiality based as the staff are usually judged on chargeability which (in the first year) is usally expected to be in excess of 100%. Having to deal with immaterial errors puts this at risk.
Because adjusting errors that aren't material takes time and therefore eats into their budget.
Big 4 audits are very materiality based as the staff are usually judged on chargeability which (in the first year) is usally expected to be in excess of 100%. Having to deal with immaterial errors puts this at risk.
Maybe so but why are they bothered by the fact that I do it?
Maslins
6th July 2009, 14:00
Agree with GaryMc. Big audit firms and big audit clients don't like putting journals through for various reasons...so they tend to only do it if material.
Smaller clients tend to like their accounts to be as accurate as possible (once accurate accounts produced they will then of course reduce WIP and increase accruals to reduce tax but that's another matter :rolleyes:)
Probably best just to provide a list of "unadjusted errors" and let them make the decision (which will inevitably be to ignore them). If you put them through, they'll probably need to adjust their consolidated figures (where your adjustments will be even more immaterial).
The thing is we are talking about a set of accounts for a subsidiary that are already done & dusted (with all known errors being adjusted).
The audit manager with the big four firm who audits the parent seems to have a problem with this and I can't see why.
Jaydee
6th July 2009, 14:07
Maybe so but why are they bothered by the fact that I do it?
I too audit the sub of a larger firm's audit - and they too dislike that I put audit journals through, but this is because they are trying to audit the consolidated position before or at the same time as my audit, so they are then auditing an ever-moving position, which of course eats into their budget.
But I take the view that I am signing mine off and will only do so when I am happy with it - they should wait until completion to audit the group if this concerns them.
I too audit the sub of a larger firm's audit - and they too dislike that I put audit journals through, but this is because they are trying to audit the consolidated position before or at the same time as my audit, so they are then auditing an ever-moving position, which of course eats into their budget.
But I take the view that I am signing mine off and will only do so when I am happy with it - they should wait until completion to audit the group if this concerns them.
That's a good point. I think you have hit the nail on the head there. Why did I not think of that?
It would also explain some of their sillier questions.