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.


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