CPABC in Focus July/August 2018 | Page 29

Examples of audit quality indicators
Take partner workload for example . This AQI is meant to measure and understand the level of work for which an engagement partner is responsible . However , some audit committee chairs said this measurement wasn ’ t important to them as long as the partners continued to deliver a quality audit . Others said it was important for them to understand the time pressures for key partners . Still others noted that the importance of this indicator may vary depending on the year — for example , if it ’ s a first-year audit , if a significant transaction occurred during the year , or if a new audit partner has been assigned to the engagement .
Project management correlates to audit quality Our pilot project highlighted the importance of project management to audit quality . A number of participants developed AQIs designed to track project management milestones or audit phases , holding the audit firm accountable for completing certain tasks by specific dates . One audit firm noted that this incentivized their engagement team to stay on track , while another participant noted that it highlighted the importance of management providing working papers to the audit firm on time .
CPAB therefore encourages the use of AQIs . And to assist in their adoption , we partnered with CPA Canada and the Institute of Corporate Directors to develop a short practical guide for audit committees that are implementing AQIs for the first time . The guide is available at cpab-ccrc . ca and cpacanada . ca . We also launched an AQI network so that current and future AQI users can share information and best practices . To join CPAB ’ s AQI Network , please contact AQInetwork @ cpab-ccrc . ca .
Examples of audit quality indicators
Timing of audit execution Use of specialists Partner / manager leverage Experience of engagement team Management deliverables Audit hours by areas of significant risk
Management plays a key role in audit quality Senior finance professionals were very involved in the pilot project , and some developed AQIs specifically to measure management ’ s role in audit quality . Many of these AQIs tracked the timing of agreed-to deliverables from management to the auditor . One organization discovered that management was late by an average of five days in providing more than 40 % of its deliverables to the auditor . This insight led management to take corrective measures , which helped reduce certain time pressures and positively affected audit quality . What this means going forward Despite the various benefits described above , using AQIs is not always easy . Challenges include difficulties in developing evaluation criteria and in quantifying key contributing factors to audit quality . Additionally , pilot participants found that reporting may require changes in firm systems and processes . Still , we expect that experience will alleviate some of these challenges over time . CPABC in Focus • July / August 2018 29