August 26, 2014 - 11:43pm
Audit Quality: The Profession Benefits from Every CPA’s Contribution
When I was in public practice, I audited both small and large entities, in both the public and private markets. Regardless of the client’s size or its stakeholders, the success of an audit depends on the dedicated efforts of numerous professionals. One or two people may oversee an engagement and chart its course, but its ultimate quality reflects each individual’s contribution and how well the team pulls together to maintain high standards. In essence, everyone has to step up to make sure the team succeeds.
The AICPA recently launched its own team effort: the Enhancing Audit Quality initiative. AICPA President and CEO Barry Melancon describes in his recent blog post how this comprehensive, integrated effort is looking at every area that impacts the quality of private entity financial statement audits. (When we talk about private entities, we are referring to all non-SEC registrants, including not-for-profit organizations, employee benefit plans and governmental entities.)
The EAQ initiative captures how the combined insights and strengths of financial statement audit stakeholders—CPAs in public practice and business, regulators and legislators, educators, financial statement users—can come together to enhance audit quality and reinforce the profession’s goal of maintaining audit excellence in an increasingly complex business environment.
With the publication of Enhancing Audit Quality: Plans and Perspectives for the U.S. CPA Profession, the AICPA invites you to join a national conversation about audit quality. This discussion paper highlights the AICPA’s efforts and potential plans to help drive audit performance. Your feedback will be considered and will influence how we move forward.
The discussion paper explains the changes the AICPA has already begun to implement, as well as changes proposed under the EAQ initiative’s two phases. Phase 1 involves planned and proposed efforts that will immediately begin to improve audit quality in areas such as establishing requirements for competence, diligence and due care; setting auditing and quality control standards; and administering the Peer Review Program. Phase 2 centers around the transformation of the current peer review program into a practice monitoring process that marries advanced technologies with human oversight.
Participating in the discussion surrounding EAQ is just one of the ways we can work together to enhance audit quality. But, don’t forget that there are a number of other ways you or your firm (if you are in public practice) can take a closer look at how you perform audits. A good starting place is aicpa.org/auditquality, which hosts a clearinghouse of resources related to the EAQ initiative. This webpage will connect you to emerging industries and risk areas identified by the Peer Review Board. In addition,the AICPA’s Governmental Audit Quality Center, the Employee Benefit Plan Audit Quality Center and the new Center for Plain English Accounting are available to help members get in-depth information to help them provide the best audit services. There is also the AICPA’s Financial Reporting Center, which provides financial statement preparers and CPAs in public practice with timely information and numerous resources covering the entire financial reporting process. Join the AICPA for a free webcast on the EAQ initiative, from 1 to 2 p.m. ET on Sept. 10.
I urge you to play your part in the team effort to enhance audit quality. Download the EAQ discussion paper, consider our proposals, respond to your peers’ comments and give us your feedback. We want to hear from you, so we can all move forward as a profession dedicated to excellence.