Audits provide the trust that makes business work. This starts with having absolute trust in the audit team you work with to do the very best job possible for you.
As a member of the audit committee, it's your responsibility to ensure that external audits are conducted successfully and with integrity. This starts with asking the right questions and establishing Audit Quality Indicators (AQIs) up front to analyze the audit and your audit team.
Audit Level AQIs
When your reputation depends on financial transparency and accuracy, you will want to understand how many hours the engagement team plans to dedicate to specific tasks, especially areas of high-risk.
Time to completion
Align on the timeline for completion of the audit and the key milestones in advance. What other assignments does the audit team have? It may be worth understanding what else they are working on, especially during critical times of the year.
How many people with specialized skills and knowledge will be involved in the audit, and how much time will they be dedicating? Specialists may have expert knowledge of your business, your industry, or of issues required to perform the audit (ex: valuation specialists, IT specialists, actuaries).
Every audit has different needs, but ideally, you want a well-leveraged team with the experience to handle your industry, organization type, and unexpected roadblocks. Ensure that communication from the team is effective and timely, otherwise this could indicate issues.
Firm Level AQIs
Professional development and training
How has the firm committed to developing the audit skills (and other skills) of its audit staff? Are there programs in place to ensure every auditor is up to date with the latest changes to standards? Do they provide on the job training and coaching?
Are they bringing a spectrum of perspectives to the table? But more than that, are they making the same commitments to diversity, equity, and inclusion that you are?
A level of trust is established right away when you can see a bit of yourself in the auditing team and vice versa. What is the tone at the top of the firm? Do they stand by their commitment to audit quality? You should align on your level of commitment to quality from start to finish.
What process does the firm have to ensure audit teams remain independent? Are they required to take training? Do they make you aware of all the services they provide? Do they recommend independent resources in areas where the business may need assistance?
This might be the most important of the indicators because you need perfection despite the fact that no one's perfect. So, what are their fail-safes? Do they monitor workloads? Do they employ knowledgeable engagement quality reviewers? And do they have a consultation process for complex issues?
Audit quality at BDO
At BDO, audit quality is our top priority. We're continually improving our processes, advancing our culture, and innovating our technology. Read our Audit Quality Report to see what our people have to say about audit quality and use it as a benchmark for your next audit.
For more information, please contact:
Nazia Lakhani, Head of Quality and Assurance Standards Partner