Rwanda: Over 20 audit firms suspended
November 17, 2022
A total of 23 audit firms have been slapped with a six-month suspension, after failing to attain the necessary level of audit quality, The New Times has learnt.
With immediate effect, Institute of Certified Public Account of Rwanda (ICPAR), also the country’s accounting watchdog, said the firms will not be allowed to operate, a move that piles further pressure on a sector already relatively nascent.
According to ICPAR, the firms fell short of the required standard, assessed through this year's Audit Quality Assurance (AQA) survey.
The exercise, ICPAR said, indicated several gaps that required significant improvements, despite “a couple” of firms, from which demonstrated instances of good practice.
“Based on the results of the survey, 23 audit firms have been temporarily closed down for six months. As the regulator, we need to ensure quality into audit reports,” a highly placed source, familiar with the decision said.
It was conducted by a Professional Development Services Director from Zimbabwe, the source explained.
“Findings are not in any way biased, we also welcome any sort of feedback from the affected firms.”
The exercise was last held in 2016, the source pointed out, and was initially supposed to be conducted every three years, starting from 2020.
“We chose three years because it is a costly exercise, and also we have to give room for improvements.”
Rwanda is home to more than 50 audit firms, with ICPAR as the regulator.
ICPAR launched a pilot audit quality assurance review program in September 2015.
The first review cycle was the pilot phase during which several reviews were conducted and provided an initial assessment of the quality of their audits.
Covid-19 impact
Like Rwanda, elsewhere research findings suggest that engagements affected by the restrictions produced lower audit quality, as measured through restatements, relative to those completed before Covid-19 travel restrictions and stay-at-home orders.
While Big 4 auditors managed to maintain their status quo level of audit quality following COVID-19 restrictions, non-Big 4 auditors were unable to overcome the challenges of an online work environment, and their audit quality declined.
Based on the results of post-restriction audits, it appears that auditors have had difficulty maintaining audit quality after being forced to work remotely.
Audit firms will therefore need to continue to develop effective ways to improve their audit process and overcome the limitations of the virtual work environment for the post COVID-19 future, studies indicate.
[The New Times]
