THE AUDIT INSPECTION UNIT has called on BDO to ensure that its growth does not lead to a culture where partners and staff sell non-audit services to its audit clients.

The inspectors' reports said that, of the eight audits inspected, significant improvement was needed in one. This was in relation to the sufficiency of audit evidence obtained for loans payable and receivable and related parties. Four of the audits were performed to a good standard with limited improvements required, and three were performed to an acceptable standard.

It recommended that BDO should be alert to issues caused by the cross-selling of non-audit services. The firm should "ensure that the emphasis on growth does not lead to a culture within the firm where there is an inappropriate focus by partners or staff on the crossâ??selling of nonâ??audit services to their audit clients, including in the setting of individual objectives", the report said.

There were reoccurring problems regarding the audit of disclosures, the inspectors said, including inadequate supporting evidence. The identification of risks also failed to show adequate improvement having been highlighted the previous year.

The firm should also review its audit of related party transactions, the report said. This included adequately scrutinizing the terms of a loan to related parties and whether transactions are on an arms length basis.

BDO was praised for linking audit quality and partner appraisals and remuneration, especially factors relating to professional scepticism exercised. The firm has also addressed issues around client acceptance and continuance procedures, relationship partners and its audit methodology

The firm said: "It is pleasing to note from the report that we place much emphasis on audit quality and that we have appropriate policies and procedures in place for our size and the nature of our client base."