In June 2017, the Australian Securities and Investments Commission (ASIC) issued its report 534 – Audit inspection program report for 2015-16. Based on the report, ASIC defines audit quality as follows (section 25): “For our regulatory purposes, audit quality refers to matters that contribute to the likelihood that the auditor will: (a) achieve the fundamental objective of obtaining reasonable assurance that the financial report as a whole is free of material misstatement; and (b) ensure material deficiencies detected are addressed or communicated through the audit report.” (ASIC 2017).
The report has also indicated the following (section 55):
“Some initiatives that appear to have improved audit quality: Initiatives undertaken by some firms that appear to have a positive impact on aspects of audit quality at those firms include:
(a) forming specialist focus groups and risk panels on impairment of nonfinancial assets, substantive analytical procedures and other areas to develop the necessary expertise, support and coaching for audit teams;
(b) increasing partner time spent on engagements;
(c) developing a strong culture focused on audit quality with accountability at all levels of partners and staff;
(d) proper project management of audits, including monitoring—at audit team and firm level—of progress against key engagement-specific milestones, and addressing issues early to minimise deadline pressures at the conclusion of the audit; and
(e) greater education of directors and management of audited entities to improve financial reporting quality and support the audit process.”
Based on your individual research, please support the above findings by ASIC and suggest any other initiatives that could positively contribute to improving audit quality.
ASIC (Australian Securities and Investments Commission). (2017). Report 534 – Audit inspection program report for 2015-16. Retrieved from https://download.asic.gov.au/media/4331127/rep534-published-29-june-2017.pdf.
|Assignment Marking Criteria/ Formart
1. Table of contents
2. Executive Summary
4. Discussions to support the above findings by ASIC. Discuss each finding separately clearly articulating how each identified finding contributes to the improvement of audit quality. Please support your discussion/ arguments with relevant literature from journal articles and other sources. (in-text citation very important) Very critical
5. Recommendations of other initiatives other than the ones provided by ASIC
– Clearly list your suggested initiatives and explain properly how each one of them would contribute towards the improvement of audit quality. Relevant literature from scholarly journals must be used to support your suggestions. (IN-TEXT CITATION very important here)