CPA Canada, working with a group of experienced audit committee members through the Institute of Corporate Directors (ICD), issued publications on audit committee oversight of the external auditor. The publications respond to calls from audit committees and audit firms for guidance and practical tools as they discuss auditor performance with a focus on audit quality.\nThe guidance includes an overview of activities that audit committees perform to assist them to oversee the external auditor. Two companion publications contain practical tools to assist audit committees to conduct an annual assessment of the external auditor, and a periodic comprehensive review of an audit firm (including guidance on the preparation and content of the audit committee’s public report on the review). The publications are a result of the recommendations and conclusions of the Enhancing Audit Quality (EAQ) initiative completed by CPA Canada and the Canadian Public Accountability Board (CPAB) in 2013.\nThe EAQ report also identified that audit committees’ evaluation of auditors and audit firms would benefit from having increased information about CPAB inspection findings. CPAB developed a protocol for audit firm communication of CPAB inspection findings. CPAB issued the draft protocol for consultation November 2013-January 2014 (for more information check out my January 9 blog post) and expects to finalize so that the protocol will be effective for CPAB audit file inspections commencing on or after March 1, 2014.\nThe guidance and tools address the implications of the communications about CPAB findings. They suggest that audit committees discuss with their external auditor systemic audit quality issues identified in CPAB’s annual public report that are relevant to the audit firm and/or the entity and what actions the audit firm, and the engagement team in particular, are taking that could affect the entity’s future audits.\nWhen CPAB has issued an inspection report on an entity’s audit file, the external auditor will provide the audit committee with specific required information on a confidential basis. The audit committee will want to discuss the external auditor’s communication. In the event of significant inspection findings, the guidance indicates that the audit committee should ask the external auditor about the nature of the finding, the cause of the deficiency and how the deficiency has been resolved, including any changes to be made in future audits. These discussions about CPAB inspection findings will provide the audit committee with useful information about audit quality from CPAB’s perspective.\nCPA Canada will be working with CPAB and the ICD over the next few months to raise awareness about the publications and the protocol and also encourages external auditors to discuss them with their clients.\nKeep the conversation going….become familiar with the new publications. Share them with your audit committees. Are they going to use them? Provide me with any feedback you receive.\nPost a comment below; or email me directly.\nEric\nConversations about Audit Quality is designed to create an exchange of ideas on global audit quality developments and issues and their impact in Canada\n.