Audit standard setters overseas are taking up the challenge of trying to answer the age-old question that vexes the profession: What is audit quality?
The International Auditing and Assurance Standards Board published a consultation paper for public comment hoping to renew and focus some dialogue on what actions auditors, regulators, and others can take to achieve continual improvement in audit quality. The IAASB says it wants to raise awareness of the key elements of audit quality and to encourage various stakeholders -- not just auditors -- to do their part to look for ways to improve audit quality.
“While the IAASB recognizes that high-quality auditing standards and well-qualified, competent, skeptical auditors are essential to a quality audit, there are many factors that contribute to maximizing the likelihood of quality audits being consistently performed,” said IAASB Chairman Arnold Schilder in a statement. “There is value in identifying and describing these factors and thereby encouraging audit firms and other stakeholders to challenge themselves to think about whether there is more they can do to increase audit quality in their particular environments.”
In a foreward to the paper Schilder says the IAASB believes audit quality is most likely achieved when when an engagement team exhibits appropriate values, ethics, and attitude, and when the team applies a rigorous audit process and quality control procedures. It's also most likely achieved when auditors have sufficient knowledge and experience, have sufficient time to perform the audit work, receive valuable and timely reports, and interact appropriately with a variety of different stakeholders.
The paper asserts that the primary responsibility for performing quality audits rests with auditors, but audit quality is best achieved when there is support from other participants in the financial reporting process. The paper says there are many factors that contribute to maximizing the likelihood of quality audits, and the board believes describing those factors and encouraging audit firms and others to challenge themselves adds value to the pursuit of audit quality.
The paper proposes a framework that describes the input and output factors that contribute to audit quality, said James Gunn, IAASB technical director, in a statement. “It also demonstrates the importance of appropriate interactions among stakeholders and the relevance of various contextual factors,” he said.
The IAASB is accepting comments on the proposed framework through May 15.