ACCA (the Association of Chartered Certified Accountants) has today responded to A Framework for Audit Quality, a consultation paper from the International Auditing and Assurance Standards Board (IAASB).
John Davies, ACCA head of technical, said: 'The Framework gives preparers, auditors, shareholders, regulators and others a shared understanding of audit quality. The IAASB has set down what is important to audit quality and what is crystal clear is that it's not about the auditor. Although auditors have to comply with stringent quality control standards, all the stakeholders in the corporate reporting supply chain have to pull together to maximise audit quality. The Framework communicates that and, if the message gets across, it will be of great value in improving audit quality.'
ACCA's response notes that, while the Framework primarily has a communication role, its success will ultimately be judged by its contribution to the continual improvement of audit quality to meet the needs of society. ACCA knows that audit plays a very important role in society. It increases user confidence in the credibility of corporate reporting and facilitates the efficient allocation and use of capital. The benefits of audit are also strongly felt in the public and not-for-profit sectors. It is implicit that audit must be of a consistently high quality.
As the global body for professional accountants, ACCA is committed to doing all it can to embed audit quality in our education, qualification, support and regulation of audit professionals and firms and in furthering the profession's contribution to society in the wider sense.
John Davies continued: 'We suggested that the Framework should firmly adopt the shareholder perspective in judging the importance of factors relevant to audit quality and also go deeper to reveal the complex interactions between them. It should inform debate, such as about mandatory rotation of auditors – stakeholders need information so they can make informed choices between alternative policies and actions. We also suggested that the Framework should do much more to recognise the importance of innovation and frankly, what hinders it, such as fear of litigation.'
He concluded: 'Finally, we wanted the Framework to make the link to a sustainable environment, economy and society; because it is important to judge audit quality in all the dimensions of modern business activity.'