The Center for Audit Quality has released an updated version of its External Auditor Assessment Tool for audit committees to address recent changes in accounting standards and potential areas of risk.

The document leverages the CAQ’s 2019 Audit Quality Disclosure Framework, and includes some new material about improving the audit committee members’ understanding of how audit quality can be supported and monitored at the firm level.

“Audit committees should regularly (at least annually) evaluate the external auditor in fulfilling their duty in order to make an informed recommendation to the board whether to retain the external auditor,” said the document.

The tool was originally published two years ago, and it now includes some extra questions related to firm-level audit quality considerations, including leadership, culture, engagement team management, audit engagement performance and monitoring, among other topics. The update addresses changes in accounting standards, such as the new revenue recognition and lease standards, along with considerations involving new and emerging risks.

“Robust, two-way dialogue that includes providing constructive feedback to the external auditor may improve audit quality and enhance the relationship between the audit committee and the external auditor,” said the CAQ.

The document includes some sample questions to help audit committees in four specific areas:

  • Quality of services and sufficiency of resources provided by the engagement team;
  • Quality of services and sufficiency of resources provided by the audit firm;
  • Communication and interaction with the external auditor; and,
  • Auditor independence, objectivity and professional skepticism.

The document provides a sample form and rating scale for getting input from company employees about the outside auditor, along with additional reading sources.

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
Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.

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