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Audit & Assurance
Audit Quality: More Than Just a Concern for Auditors
The recent speech by James Doty, Chairman, US Public Company Accounting Oversight Board (PCOAB), discussing the link between audit fees and audit quality is quite encouraging for a very important reason—it appears to show that regulators like the PCAOB are recognizing that enhancing audit quality goes far beyond the role of the auditor; and what is solely within an auditor’s influence and ability to control.
While no one would argue that the auditor has the primary responsibility for the conduct of a quality audit for a particular audit engagement, the concept of audit quality within a jurisdiction is a much broader issue.
As the International Auditing and Assurance Standards Board (IAASB) recently described in its Framework for Audit Quality, there are many factors that create an environment for enhancing audit quality within a jurisdiction. It notes that while the role of the auditor is paramount, there are many other factors and interactions that impact audit quality.
These include, but are not limited to, the corporate governance arrangements within companies being audited, the commercial and business laws and regulations with the jurisdiction, and the robustness of the financial reporting framework. Additionally, the roles and responsibilities of regulators, boards, audit committees, and users—and their interactions and relationships with auditors and audit firms—can have an impact on, and should be considered when assessing, audit quality.
So what do you think? Can auditors alone be held responsible for audit quality within a jurisdiction?
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