By Allison M. Henry, CPA, CGMA, vice president – professional and technical standards
It’s hard to believe that it’s been three years since the AICPA started its Enhancing Audit Quality (EAQ) initiative. To refresh your memory, this effort takes a holistic approach to improving audit quality, including making changes to the CPA Exam, transforming the approach to training, considering enhancements to audit and quality control standards, evaluating third-party practice aids, improving the peer reviewer pool by enhancing the required qualifications and training, and proactively pursuing ethics investigations and regulatory referrals for egregious work.
The scope of the EAQ initiative is considerable, and the AICPA’s accomplishments to date have been far-reaching, demonstrating its commitment to enhancing audit quality. The AICPA recently released a progress report, Enhancing Audit Quality – 2017 Highlights and Progress, that summarizes progress on their key initiatives. Many of the accomplishments and projects in progress relate to CPA competency, tools, and related professional standards. Here are some of the highlights:
The most significant work to date has been in peer review and professional ethics, including revisions to peer reviewer training and more rigorous qualifications, a new peer review system, in-depth root cause analysis, new training resources for firms, and proactive ethics activities and state board outreach. Here are a few specifics:
So, what’s next? Firms that perform audits should review the results of recent audit quality studies, consider the lessons learned from the AICPA’s enhanced oversights, and evaluate their practice composition and quality control systems for risk areas. For example, firms that perform relatively few high-risk engagements have high nonconformity rates; partners with many years of experience performing single audits have a higher rate of conformity; and AICPA audit quality center members have a higher rate of conformity. It may be time to join the quality center, take additional training, or stop performing certain types of audits.
To achieve high quality, the AICPA has many free resources that can help you ensure that you are ready for any regulatory or peer review oversight. These free resources include documentation resources, quality control resources (including an audit and accounting practice aid titled Establishing and Maintaining a System of Quality Control for a CPA Firm’s Accounting and Auditing Practice), as well as resources designed for single audits and employee benefit plans (tool for evaluating SOC 1 reports, more EBP resources are in progress). They also created new competency frameworks, certificate programs, free checklists (e.g., Yellow Book independence compliance checklist, etc.), training materials, blogs, and articles. The AICPA is committed to ensuring progress on the audit quality front.
The PICPA is eager to help firms avoid peer review problems. In response to the AICPA’s audit documentation findings, we recently held a CPE program for peer reviewers, Enhancing Audit Quality – A Focus on Peer Review, to communicate the AICPA’s oversight results, to encourage peer reviewers to adhere more closely to the documentation standards, and to point out the AICPA's new documentation resources. This will be made available to firms as a webinar in our On-Demand library. Additionally, firms can call to consult with the PICPA Professional & Technical Standards team on technical issues. We will either provide guidance or direct them to someone in the peer-to-peer network, a quality control consultant, or a member of a technical committee who can be of assistance.
Ultimately, firms have access to plenty of resources to assist in achieving high audit quality, and more are coming. Feel free to reach out to me with your suggestions. I can be reached at ahenry@picpa.org, or (215) 972-6187.
Order by
Newest on top Oldest on top