The responsibility for audit quality does not only rest with the auditors but it is supported by other stakeholders such as preparers, audit committees, regulators, and accounting and auditing standard-setters, the US Centre for Audit Quality (CAQ) said in a letter to the Public Company Accounting Oversight Board (PCAOB) in response to the board’s attempt to define audit quality.
The CAQ said that all the above stakeholders contribute to a well-functioning capital market system, which is dependent on reliable financial statements, "although their responsibilities for financial reporting quality and potential impact on audit quality differs depending on the functions they perform".
The CAQ said that the development of a definition of audit quality should:– Recognise the role that the audit committee plays in providing oversight of the audit services, and how this oversight contributes to enhanced confidence in the financial statements,– Incorporate the compliance with the applicable regulations and professional standards and consideration of the audit firm’s system of quality control, which is designed to consistently deliver quality audits in a dynamic and evolving environment, and, – Provide linkage to the key elements of an audit quality framework as developed and based on the PCAOB’s quality control standards or other professional standards.
CAQ executive director Cindy Fornelli said: "Audit quality indicators could be used to better inform audit committees and other stakeholders about audit quality, and how it evolves over time." "We feel it is appropriate to share our perspectives in advance of the SAG meeting [PCAOB’s Standing Advisory Group] in an effort to further the dialogue on this important topic," said Fornelli.