Audit Quality: Key Insights for Auditors
To enhance the quality and integrity of audits, the Audit Focus Committee (AFRC) has identified several key areas that auditors must focus on.
Clearly Define Firm’s Mission, Vision, and Core Values
Auditors are reminded to clearly define their firm’s mission, vision, and core values, demonstrating a strong commitment to quality. Leadership, including Chairpersons and Managing Partners or equivalent, should be held accountable for the effective implementation of audit quality management (SoQM), even when utilizing external resources from service providers.
Conduct Comprehensive Risk Assessment
Auditors must conduct a comprehensive and robust risk assessment that takes into account factors such as:
- The firm’s structure
- Business models
- Available resources, including:
- Human resources
- Technological resources
- Intellectual resources
- Service providers
This will enable them to develop an effective plan to allocate and utilize resources effectively.
Develop Detailed Plan and Strategy
A detailed plan and strategy should be developed to ensure that quality objectives are met. This plan should include:
- Allocation of resources, including:
- Human resources
- Technological resources
- Intellectual resources
- Service providers
Establish Ongoing Monitoring Process
Auditors should establish an ongoing monitoring process to continuously evaluate the operating effectiveness of SoQM. This will enable timely identification of deficiencies and implementation of corrective actions.
Effective Reviews by Engagement Partners/Engagement Quality Reviewers
Firms must establish policies and procedures that promote and monitor the effectiveness of reviews conducted by engagement partners or engagement quality reviewers (EQRs). Auditors should recognize their duties and responsibilities to report significant matters to regulators if they come to attention.
Integrity and Quality of Audit Documentation
Auditors are reminded to ensure:
- Prompt completion of assembly of engagement files
- Uphold the integrity, accessibility, and retrievability of engagement documentation
- Completion of audit documentation before finalizing the auditor’s report
Key Insights for Auditors
To enhance audit quality, auditors should:
- Implement ongoing measures to monitor workloads and areas of expertise of partners
- Establish an audit milestone program that outlines specified completion timelines for key audit activities
- Develop a set of audit quality indicators and establish programs to hold engagement partners and EQRs accountable for audit quality
By focusing on these key areas, auditors can enhance the quality and integrity of their audits, ensuring compliance with relevant laws and regulations.
Conclusion
The AFRC emphasizes the importance of cultivating a culture that reflects a commitment to quality and timely reviews. Auditors are reminded to have ZERO tolerance regarding unauthorized alterations of audit documentation. By following these key insights, auditors can ensure the highest level of audit quality and integrity.