Why does audit quality matter? Well, first and foremost, the audit landscape has changed due to changing peer review requirements. To explain, the AICPA’s Enhancing Audit Quality Initiative brought to light numerous deficiencies identified during peer review. Therefore, it is important for firms to be aware of the deficiencies the AICPA identified, and ensure their technology solutions assist in providing compliance with the standards.
To continue, the Enhancing Audit Quality (EAQ) Initiative launched in 2014 with the purpose of promoting audit quality. The initiative provides audit teams resources and tools necessary to maintain and enhance their own competencies and promote high quality audits.
With this intention, the AICPA’s EAQ identified these statistics regarding audit issues:
- 40% are due to an auditor’s failure to understand a client’s internal controls
- 14% are due to an incomplete or non-existent risk assessment
- 24% are due to auditors’ failure to address the risks they uncover
- 13% are due to auditors’ failure to test clients’ internal controls and recognize high-risk area
Additionally, CPA firms face many business challenges all while trying to maximize realizations, including:
- Performing quality audits
- Incorporating analytics into the audit workflow
- Meeting client expectations
- Providing actionable insights to their clients
So, what are smart firms doing to ensure they overcome these business challenges while also following direction from the EAQ Initiative?
A Firm’s Perspective on Quality Audits
As an illustration, Garrett Stenhouse, Manager with DiSanto Priest and Co, notes that many of business challenges mentioned interrelate. Additionally, he expects more scrutiny in their upcoming peer review process – as compared to prior years – likely due to the EAQ Initiative. Therefore, he looks to technology like CCH® ProSystem fx® Knowledge Coach for assistance with standards compliance and performing quality audits.
When they moved to Knowledge Coach, Garrett noticed the solution solves all the risk violations that today’s most commonly used methodology does not. Because of its risk-based methodology, the solution works like a GPS for audits. It literally prompts the auditor to:
- Consider what program steps address the risk assessment
- Create direct linkage between the program step and identified risk, with help from robust diagnostics
Information and answers than dynamically flow through all workpapers. In addition, when the flow of information results in additional work, diagnostics are also automatically created.
There’s no better time than the present to:
- Review the technology you’re using
- Consider what solutions will ensure standards compliance and higher quality audits
Knowledge Coach IS one of those solutions. Whether you’ve checked Knowledge Coach out before or not, it’s worth your time to look at it now. Learn more today.