The Center for Audit Quality and the Audit Committee Collaboration have updated the External Auditor Assessment Tool, a resource that helps audit committees better evaluate audit firms.

The tool provides a general framework to help audit committees in choosing, overseeing and compensating their outside auditors.

The updates to the tool are related to upcoming changes in accounting standards, including new rules for revenue recognition, leasing, and credit loss standards, and new Public Company Accounting Oversight Board standards.

In addition to a sample form and a rating scale for getting input from company personnel on the outside auditor, the tool includes sample questions that focus on three main areas:

  • The quality of services and level of resources provided by the auditor;
  • The quality of communication and interaction with the auditor; and,
  • The auditor’s independence, objectivity, and professional skepticism.

“Since its debut in 2012, the External Auditor Assessment Tool has become a valued resource for audit committees,” said the CAQ’s executive director, Cindy Fornelli, in a statement. “We are pleased to update the tool as part of the public company auditing profession's drive to enhance audit quality, to strengthen investor confidence, and to promote effective corporate governance.”

Center for Audit Quality executive director Cindy Fornelli at the CAQ's 10th anniversary event
Center for Audit Quality executive director Cindy Fornelli at the CAQ's 10th anniversary event Courtesy of the CAQ

As a companion to the updated tool, the CAQ has produced a new video that includes interviews with leading audit committee chairs about the assessment process, and how they use the tool.

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Daniel Hood

Daniel Hood

Daniel Hood is editor-in-chief of Accounting Today and Tax Pro Today, and has covered the tax and accounting field for over 20 years.