In their continuing pursuit of the highest possible quality in their work, many audit firms produce annual transparency or audit quality reports to inform the public about their efforts.
To help audit firms develop those disclosures, the Center for Audit Quality (CAQ) has developed a new Audit Quality Disclosure Framework. The CAQ is affiliated with the AICPA.
The framework builds on previous work by the CAQ and others in the profession to develop and seek audit quality indicators. A combination of these indicators or metrics, along with thorough discussion, can lead to helpful disclosures about how a firm monitors audit quality.
“Public company accounting firms make significant investments in their people, processes, policies, and technology related to audit quality,” CAQ Executive Director Cindy Fornelli said in a news release. “Our framework can facilitate consistency and comparability over time as firms foster transparency and trust by informing the public about their work to maintain and enhance audit quality.”
The framework was developed in consultation with a range of CAQ member firms. It was built to be voluntary, illustrative, flexible, and geared toward disclosure at a firm level, rather than at the engagement level. The framework provides points of focus for six elements of audit quality and contains examples of firm-level audit quality indicators:
- Leadership, culture, and firm governance.
- Ethics and independence.
- Acceptance and continuance of clients and engagements.
- Engagement team management.
- Audit engagement performance.
More information on these efforts to enhance audit quality can be found on the CAQ website.
— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.