Center for Audit Quality updates its auditor assessment tool
The Center for Audit Quality has released an updated version of its External Auditor Assessment Tool for audit committees. The tool is designed to assist audit committees in carrying out their responsibilities of appointing, overseeing, and determining compensation for the external auditor.
The update addresses recent changes in accounting standards (such as the new revenue recognition and lease standards and potential new areas of risk. The main changes include additional material to support audit committee members’ understanding of how audit quality can be supported and monitored at the firm level.and reflect the CAQ's 2019 Audit Quality Disclosure Framework. It includes additional questions related to firm-level audit quality, including leadership, culture, engagement team management, audit engagement performance and monitoring.
The CAQ considers that "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".
The tool contains sample questions to help 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
- Auditor independence, objectivity, and professional skepticism