Most companies dread getting audited, whether the source comes from the IRS or from a public mandate because your organization has special tax considerations. Either way, audit quality is the key to ascertain your firm's true financial strength. The International Auditing and Assurance Standards Board just published its five-year strategy to help auditors and companies move forward efficiently and effectively.
Arnold Schilder, writing for Accounting Today, states high-quality audits, IAASB standards for other services provided by the group's members and stronger collaborations are the main tenets of the five-year strategy. The board used feedback from its outreach programs to develop the strategy and to create a two-year plan focused on audit quality and public interest issues.
The four most important aspects of audit quality noticed by the board include group audits, professional skepticism, quality control and audit considerations relevant to financial institutions. Part of this two-year strategy comes from the completion of the previous five-year plan that helped get international companies, banks and insurance companies through the recession that started in 2008. The IAASB's strategy looks to strengthen auditing practices to try to prevent another such financial calamity.
Professional skepticism within this strategy focuses on banks and financial institutions. Auditors, in order to have high audit quality, must see through the bias of management to get a clear financial picture. Executives may see their company's financial status better than what is actually reported in an audit. Without professional skepticism, trouble spots may not be as readily apparent to auditors.
Quality control involves reviews of the initial auditor's work. A reviewer may ask, "Was the initial interviewer independent from the firm's engagement team?" Another relevant issue revolves around the extent, timing and documentation of a quality control review of an audit. This way, audit quality improves when possible problems are found due to another set of eyes reviewing an auditor's initial work. Reviewing the audit before its release ensures accuracy, timeliness and public trust in the report.
On-site auditing can be stressful for the firm being audited. An auditor should prepare for the venture ahead of the visit by engaging relevant executives and managers beforehand. Professionals should take the time to request copies of company procedures and internal reports. Auditors need to inform the company's accounting department what books, programs and documents are needed to perform a successful audit.
The most important aspect of a stress-free audit is professional politeness. Everyone knows audits are necessary to ensure the financial well-being of companies. Auditors can allay fears, stress and worry by showing professional courtesy to clients. After all, auditors do get paid to do what they do. Decrease worry and lessen mistakes by striking a neutral yet friendly mood with the firm's employees.
IAASB standards only go so far to ascertain audit quality. In the end, the professionalism of individual auditors and the accounting firms for which they work determine whether or not an accurate portrayal of a firm's finances emerges from an audit. Moving forward, the IAASB exists to help auditors in any way possible.
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