“Pilot participants identified various
uses for AQIs...”
Here’s an example: An organization with complicated tax accounting might decide that it’s
important to include an AQI about the work effort of tax specialists. A target of 25 hours is set.
At year-end, the auditor reports 55 hours of specialist work. The aforementioned AQI helps the
audit committee ask specific questions of the auditor. In this case, were the increased hours a
result of new complexities in the tax accounting? Or do they highlight increased risk or inef-
ficiencies in the auditor’s or management’s processes? If the latter is true, the audit committee
will likely want to learn more.
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28 CPABC in Focus • July/August 2018
What the pilot project
revealed
We learned a lot from the pilot project. Here
are some of the key takeaways.
AQIs have tangible benefits
The potential benefits of implementing AQIs
include:
• A better understanding among
management, the external auditor, and
the audit committee with regard to their
respective responsibilities in facilitating
a quality audit.
• More efficient and effective interactions
between the audit committee and the
auditor because discussions are focused
on the most important areas of the audit.
• Improved knowledge of and engagement
in the audit process and audit quality by
all audit committee members.
• Improved project management with
regard to the audit, including the
co-ordination of, and collaboration in,
its execution.
• Better information for the purposes of
auditor evaluation.
These benefits enhance audit quality in two
ways: First, clarifying the expectations among
stakeholders improves co-ordination and
co-operation; second, the more informed
and engaged the audit committee is, the better
its oversight of the audit process.
AQIs are multi-purpose
Pilot participants identified various uses
for AQIs, including general oversight of the
audit, evaluation of the external auditor, and
the monitoring of auditor value. For example,
one audit committee chair used AQIs to
monitor “sensitive areas of interest of the audit
committee,” such as the adoption of new IFRS
standards. Another audit committee chair
used AQIs to help in the annual evaluation
of their external auditor.
There are no silver bullets
What is the best AQI? Well, there really is no
such thing. The pilot project showed us that
the usefulness of an AQI depends on the
perspectives of the users and on their spe-
cific needs and goals.