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ACCA publishes a guide to indicate the features of a quality audit

  • ACCA (UK Association of Chartered Certified Accountants) (lt green) Image

16 Feb 2018

The Association of Chartered Certified Accountants (ACCA) has published a guide indicating, what in its opinion, are the features of a quality audit.

Although the ACCA notes that the quality of audit has improved and continues to improve, there are still improvements that can be made and initiatives to be explored to drive better audit quality.

The guide builds on the framework for audit quality published by the International Auditing and Assurance Standards Board (IAASB) in 2014 which aimed to raise awareness of the key elements of audit quality, encourage key stakeholders to do more to increase audit quality, and facilitate greater dialogue between key stakeholders on the topic. It recognises that the features of a good quality audit can sometimes exist in mutual tension and highlights that “as a result, an open and honest debate is needed about how audit quality can be maximised”.

The guide, Tenets of a quality audit, identifies the following five factors that, in the opinion of the ACCA, contribute to audit quality:

  • Thoroughness and timeliness – thoroughness in an audit is required to ensure all risks are addressed and all issues are resolved prior to issuing the audit report. The value of audit to investors and the public also lies in its timeliness.
  • Independence and closeness – the auditor should remain independent at all times when performing the audit. Audit quality is also enhanced by the closeness to an audit client that is acquired through repeated involvement in the engagement.
  • Standardisation and autonomy – quality audits require a certain degree of standardisation (at a basic level the auditor must follow auditing standards) and, at the same time, require the auditor to exercise some autonomy in deciding where risks lie and, therefore, where to do more of less work.
  • Delivering a holistic opinion and responding to fraud – a quality audit requires the delivery of a holistic opinion – the ‘true and far’ view – over the financial statements. A risk-based approach is vital to ensuring that, as far as possible, the auditor spends most of their time on the riskiest parts of the audit and that the opinion is holistic. Audit quality also requires the auditor to respond to fraud of suspected fraud.
  • Backward-looking and forward-looking – a quality audit requires backward-looking testing, in which the auditor tests historical transactions in the company’s ledgers. A quality audit also requires the auditor to have regard to forward-looking information and to incorporate considerations of that information into the audit report.
  • Transparency and confidentiality – a quality audit requires transparency by the auditor and users do not expect the auditor to withhold salient information from the audit report. At the same time, the audit process relies upon a share understanding that private information disclosed to the auditor will remain confidential.

A press release and the full guide are available on the ACCA website.

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