Audit committees prefer customized, tailored audit quality indicators

A CAQ pilot identifies audit committee objectives.

Audit committee members would prefer the ability to tailor and customize audit quality indicators to suit their specific information needs, a new Center for Audit Quality (CAQ) report shows.

In 2014, the CAQ, which is affiliated with the AICPA, proposed a set of audit quality indicators for engagement teams that could be used to better inform audit committees about key matters that may contribute to the quality of an audit. After a pilot test of the proposed indicators, most of the participating audit committees and engagement teams generally expressed support for a discussion of audit quality indicators between audit committees and engagement teams, though feedback on individual indicators varied.

Key findings from the round-table discussions included:

  • Endorsement of a flexible approach that would allow an audit committee to work with the external auditor and customize the portfolio of audit quality indicators.
  • Audit committees desire information for use in the qualitative aspects of the audit; this information cannot be adequately captured in quantitative audit quality indicators and is best achieved through dialogue.
  • Agreement that audit quality indicators without context can't adequately communicate factors relevant to any particular audit engagement or audit firm.
  • Agreement that audit committees should drive iterative processes to identify audit quality indicators, with continuing assessment and refinement to meet changing information needs.
  • Belief that mandated public disclosure of engagement-level audit quality indicators could lead to unintended consequences and that any disclosures of information on engagement-level audit quality indicators should be voluntary.

SPONSORED REPORT

Cybersecurity threats proliferating for midsize and smaller businesses

This report details how SMBs can properly protect private information from breaches, design and implement a cybersecurity policy, and create safeguards for training and education.

QUIZ

News quiz: Senate health care bill in the spotlight

Reports related to the Republican bill to repeal many provisions of the PPACA, other tax issues, and the giant AICPA ENGAGE Conference offered a diverse reading list for June. See how much you know about recent news with this short quiz.