The AICD and the Auditing Assurance Standards Board (AUASB) have joined forces to produce a new guide designed to ensure high standards of board oversight of financial reporting.
The Periodic Comprehensive Review of the External Audit provides directors with a practical resource to govern their company's audit arrangements more proactively and effectively.
It offers step by step guidance to assist audit committees conduct a more in-depth and formal process for assessing the quality of their auditor.
Audit is a key integrity measure in a company's governance framework and this guide will be an additional tool at their disposal.
It contains advice on creating a more regular framework for comprehensive reviews and enhanced disclosure measures, to promote greater transparency of the processes audit committees use to assess the quality of the auditor.
Factors that should be considered include technical competence, the auditor's ability to translate knowledge into realistic analysis, understanding of the business, industry and/or environment it operates within, risk areas and key issues.
The guide also details the need for audit committees reviewing the work and performance of company auditors to communicate a well-informed conclusion to the board on whether to retain the auditor or remove them.
Audit quality standards are high in Australia and maintaining these standards is central to both stakeholder and investor confidence in financial reporting and the operation of capital market.
