Academic journal article Journal of Accountancy

A Holistic Approach to Audit Quality: The AICPA Is Aligning Its Audit-Related Efforts in Order to Improve Audit Performance

Academic journal article Journal of Accountancy

A Holistic Approach to Audit Quality: The AICPA Is Aligning Its Audit-Related Efforts in Order to Improve Audit Performance

Article excerpt

In one of the first steps of the new Enhancing Audit Quality (EAQ) initiative, a major effort to improve auditing of private entities, the AICPA has released a discussion paper seeking stakeholder perspectives.

Through the two-phased initiative, the AICPA is coordinating resources to improve performance in audits of private entities, defined as non-SEC registrants, including not-for-profits, employee benefit plans, and governmental entities.

"EAQ is a holistic effort to consider auditing of private entities through multiple touch points, especially where quality issues have emerged," AICPA President and CEO Barry Melancon, CPA, CGMA, said in a news release. "Many AICPA committees, boards, and staff contributed to the EAQ. The goal is to align the objectives of all audit-related AICPA efforts and collectively improve the quality of audit services delivered by the profession."

The EAQ initiative's first phase will involve planned and proposed efforts that will immediately drive quality. The second phase will transform the current Peer Review Program, combining technology and human oversight in practice monitoring.

In a discussion paper released Aug. 7, the AICPA described its plans and proposals to address quality issues related to financial statement audits of private entities. To read the paper and provide comments, which are due Nov. 7, visit aicpaorg/EAQpaper. Some efforts that already are underway are included in the discussion paper.

The AICPA Peer Review Board is considering significant steps to improve the quality of reviewers. These include initial and annual competency tests, expediting the process of expelling a reviewer, and enhancing qualification requirements for reviewers of certain specialized industry engagements, such as employee benefit plan (EBP) audits. The AICPA also has established a team of experts to perform oversight of peer reviewers, focusing on audits of certain specialized industry engagements.

In May 2015, peer reviewers will begin performing more extensive reviews of audits in certain high-risk industries and specialized areas. …

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