The AICPA released a Six-Point Plan to Improve Audits on Thursday that provides a roadmap for the profession’s continued journey to improving audit performance in an increasingly changing business world. The plan concentrates on financial statement audits for private companies, employee benefit plans and governmental entities in the United States.
The AICPA’s Enhancing Audit Quality (EAQ) initiative, launched in May 2014, looks to address quality issues on a holistic, ongoing basis, with special emphasis on specialized audits, such as those of governmental entities and employee benefit plans. An EAQ discussion paper published last August generated hundreds of comments from practitioners and other stakeholders on ways to improve audit quality. The Six-Point Plan captures stakeholder input and the AICPA’s strategic thinking to improve audit quality.
“Audit quality has always been a CPA profession imperative. And as the issue has risen in importance worldwide, we recognized that a bigger, bolder step was needed to address challenges related to financial statement audit performance,” stated AICPA President and CEO Barry C. Melancon. “This concerted effort is at the core of the profession’s quality-driven mission to meet the needs and challenges of a rapidly changing financial marketplace.”
The Six-Point Plan outlines adjustments in the following areas:
1. Pre-CPA Licensure A next version of the CPA exam designed to increase assessment of higher-order skills, such as critical thinking and professional skepticism; high school Advanced Placement accounting course; changes to college-level accounting education; additional doctoral-level audit professors with practical experience.
2. Standards and Ethics Quality control standards implementation support; auditor’s report revisions; evaluation of clarified standards implementation; ethics code codification.
3. CPA Learning and Support Competency models for audit engagements, including employee benefit plan and governmental audits; competency assessment tools; targeted resources to develop competencies; certificate programs to demonstrate competence.
4. Peer Review Increased focus on greater risk industries and areas; more significant remediation; root cause analysis; termination from the peer review program after repeat quality issues.
5. Practice Monitoring of the Future Long-term initiative for near real-time, ongoing monitoring of firm quality checks using robust technological platform.
6. Ethics Enforcement and NASBA Collaboration More aggressive pursuit of reported deficiencies and stronger ties with the National Association of State Boards of Accountancy and state boards of accountancy.
“The entire profession must be committed to enhancing audit quality, just as the AICPA is committed to supporting our members with the necessary tools, training and resources,” said Susan S. Coffey, the Institute’s senior vice president of public practice and global alliances, in a statement. “This Six-Point Plan will promote the pursuit of quality throughout a CPA’s journey from before an individual is licensed to when he or she builds professional competency and engages in peer review and practice monitoring. It places the necessary emphasis on areas that we believe will help our members stay focused on achieving the highest level of performance for financial statement audits.”
For more information on the Six-Point Plan, head to the AICPA's site here.