12 February 2020

IFAC outlines five factors for high-quality audit, issues call to action for stakeholders in audit ecosystem

The IFAC and the global accountancy profession are committed to continuous improvement and recognize the negative consequences of any audit failure. As audit reviews unfold in various national jurisdictions, IFAC is setting out its recommendations for achieving high-quality audits.

Achieving high-quality audits requires a well-functioning ecosystem built upon ethics and independence preconditions to achieving high-quality audits. This ecosystem involves a number of factors and participants including the right people, the right governance, and the right regulation. These elements must all work together to produce the right audit that meets the expectations of stakeholders. The quality of audit must be assessed by the right measurements.  In the absence of any of these components, the audit may not meet the expectations of stakeholders.

In order to achieve high-quality audits, IFAC identifies five essential factors: the right process, the right people, the right governance, the right regulation, and the right measurement.

IFAC calls on all participants to create an environment that consistently produces high-quality audits. In particular, firms, Professional Accountancy Organizations (PAOs), regulators, audit committees and audit/assurance professionals must work to:

• Approach audits as a value-added service; not as a compliance exercise
• Evolve new assurance services to meet the needs of all stakeholders
• Continue focus on enhancing skills and competencies, adhering to fundamental ethical principles
• Ensure diversity in hiring practices
• Enhance transparency and communication from audit committees, firms, and PAOs
• Adopt a prudential and evidence-based approach to regulation

Full press release on IFAC

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