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Practice Monitoring Program and Quality Control Reviews

Practice Monitoring Program and Quality Control Reviews

To achieve the objective of AABE which are stated as a main objective on the regulation No. 332/2014 Article 5 sub-article 1-5 the AABE audit quality reviewers conducts the following core activities regarding to Audit Quality Assurance service of the Firms based on the outlined procedure of Practice Monitoring Programme (PMP) and Quality Control (QC) process.

Practice monitoring programme (PMP) &Quality control (QC) involves the following basic steps:

  1. Audit practice reviewers appointed by the Accounting and Auditing Board of Ethiopia (AABE) selects auditors to review if the audits were performed in accordance with the professional standards (i.e. International Standards on Auditing (ISAs), IAASB, IFAC code of professional ethics, ISQM 1&2, and/or other requirements as Adopted, Adapted or amended by AABE) and;
  2. The practice reviewer’s findings are reviewed by the internal reviewers, which comprises experienced & senior reviewers or managers. If the internal review cannot be cleared return to quality assurance reviewer. If the internal reviewer clear, then reports to the hearing examiners with recommended outcome and actions, if the review is that the auditors has failed to observe, maintain or apply the prescribed professional standards, or that compliance with the professional standards is assessed to be partially satisfactory or not satisfactory.
  3. If the hearing examiners concludes that the Auditors has failed to observe, maintain or apply the prescribed professional standards, or that compliance with the professional standards is reviewed to be not satisfactory, the hearing examiner reports to the director general of AABE.
  4.  The director shall order the Auditors to undertake remedial actions, or lead to legal department to execute necessary legal actions as needed which are specified on Proclamation 847/2014 Art. 42 sub-article 1-5, Which are;
  • A) To Issue a warning to the auditors to meet the prescribed requirements
  • B) Require the public auditors / partners or employees of the firm to undergo training to improve their capacity to provide high quality audit services
  • C) Suspend the license of public auditors or audit firms
  • D) Revoke the license of public auditors or audit firms
  • E) Impose administrative penalty against the public auditors or audit firms not exceeding Birr 25,000

Audit reviews Report to the Public

The Practice Monitoring Programme (PMP) and Quality control(QC) which is conducted by AABE audit review experts is an important regulatory instrument in promoting high audit quality service through ascertaining whether Auditors have complied with the prescribed auditing standards, methods, procedures and other requirements, so that audit firms will deliver consistent high audit quality service to the public. In accordance with the regulation no. 332/2014 Article 27(5), the board may cause to publish in its official reports, on its page, e-bulleting, or in daily newspaper, the decision of the board with respect professionals.

The Practice Monitoring Program (PMP) and Quality control (QC) is an important regulatory instrument in promoting high audit quality. Audit quality is the cornerstone of public confidence in the reliability of the financial information upon which the market makes capital allocation decisions.

The PMP provides quality assurance to the market through ascertaining whether public accountants have complied with the prescribed auditing standards, methods, procedures and other requirements. This assurance gives users of financial reports increased confidence in audit opinions.

Working with Partners to Promote High Quality Audit

Different groups in public contribute to audit quality in addition to auditors, especially directors, preparers of financial statements and investors. To foster a strong eco-system that promotes audit quality, AABE works with partners in the profession and the business community in a concerted effort to provide help to Auditors, and educate business people about their roles in the audit process as well as the value of a good audit.

Learn more about AABE events and resources relating to audit quality.