IAASB Releases New Framework for Audit Quality

The International Auditing and Assurance Standards Board has released a new publication with the goal of raising awareness of the key elements of audit quality.

The document, “A Framework for Audit Quality: Key Elements that Create an Environment for Audit Quality,” aims to encourage auditors and other stakeholders to challenge themselves to do more to increase audit quality in their own environment, and facilitate greater dialogue between key stakeholders on the topic.

In the framework, the IAASB, which operates under the auspices of the International Federation of Accountants, recommends taking a holistic approach, describing the different input, process, and output factors that are relevant to audit quality at the engagement, firm and national levels. 

“Audit quality is, and will continue to be, an area of principal attention by the IAASB and others,” said IAASB chairman Arnold Schilder in a statement. “This new framework contributes to further progress on the topic by making clear that, while responsibility for performing quality audits of financial statements rests with auditors, audit quality is best achieved in an environment where there is support from and appropriate interactions among participants in the financial reporting supply chain.”

The document discusses the importance of appropriate interactions among stakeholders, and how they may facilitate improvements in audit quality, as well as perceptions of audit quality. The framework also demonstrates the importance of different factors, such as laws and regulations, the litigation environment, corporate governance, and the financial reporting framework. Collectively, those factors have the potential to affect the nature and quality of financial reporting and, directly or indirectly, audit quality.

“Our discussions on the framework have been informed by many sources, including the regulatory community, international ethics and accounting education standard setters, the IAASB’s Consultative Advisory Group, and the public,” said IAASB technical director James Gunn. “Our hope is to see continued dialogue on the topic, and that active use of the framework by various stakeholders will result in positive actions in the public interest to achieve a continual improvement to audit quality.”

The IAASB plans to continue to take steps later this year and in the future to further promote dialogue on audit quality and encourage organizations to use the new framework to help them improve audit quality.

For more information, visit the “Focus on Audit Quality” section of the IAASB’s Web site.