CAQ Framework Aims to Assist Accounting Firms Enhance Disclosures About Audit Quality

Enhanced disclosures, along with related metrics, can promote important dialogue and deepen the understanding of audit quality, according to a new resource published by the Center for Audit Quality (CAQ). The Audit Quality Disclosure Framework assists firms in their ongoing efforts to develop such disclosures, which many accounting firms now provide through annual transparency or audit quality reports.

“Public company accounting firms make significant investments in their people, processes, policies, and technology related to audit quality,” said CAQ Executive Director Cindy Fornelli. “Our Framework can facilitate consistency and comparability over time as firms foster transparency and trust by informing the public about their work to maintain and enhance audit quality.”

Developed in consultation with a range of CAQ member firms, the Framework adheres to three key principles:

The Framework is voluntary and illustrative, as opposed to prescriptive or all-inclusive.
The Framework is flexible, giving firms the ability to tailor the information that is most relevant and meaningful to audit quality.
The Framework relates to disclosure of a system of quality control at a firm level, rather than at the engagement level.

Under these overarching principles, the Framework provides “Points of Focus” for six elements of audit quality and certain examples of firm-level audit quality indicators (AQIs):

Leadership, Culture, and Firm Governance
Ethics and Independence
Acceptance and Continuance of Clients and Engagements
Engagement Team Management
Audit Engagement Performance
Monitoring

This Framework builds on past efforts of the CAQ, its member firms, and others to develop perspectives on AQIs. More information on these efforts can be found at the CAQ’s dedicated AQIs resource page.