Unlock the value of your company’s audit

Looking for ways to transform your audit into a value-driven asset for the organization? Eric Turner, principal, Auditing and Assurance Standards, shares his thoughts on where you can begin.

A symposium convened by the Canadian Public Accountability Board (CPAB) covered a broad range of themes related to enhancing audit quality; among them, possible means of enhancing the relevance and value of the audit.

Commentators at the symposium identified the need for auditors to make the audit more effective and efficient, provide assurance on information beyond the financial statements (such as on the management’s discussion & analysis) and even provide assurance in new areas such as an entity’s business risk model.

This is a topic of great importance to Chartered Professional Accountants of Canada (CPA Canada), and we have begun a small project, looking at it through a simpler lens: how to make today’s audit more relevant and valuable. We started by talking to those who are often best positioned to see the value of the audit and how relevant it is for them — the audit committees.

We Asked Some Basic Questions:

  • What are the features of a high value audit from your perspective?
  • How can the external audit better assist you to meet your various responsibilities?
  • How do you establish the pre-requisites for a high value audit?
  • What actions can an audit committee take to unlock value from an audit to better respond to the committee’s evolving needs and expectations?

Not surprisingly, the group emphasized that the auditor’s opinion on the audited financial statements is of primary value because it is critical to the financial reporting process. However, the group believed that the audit committee’s communication with and evaluation of the auditor can also provide useful insights into:

  • the quality of the audit process, including:
  • auditor’s understanding of the entity and its environment
  • how the auditor addressed risks
  • issues identified by the auditor and how these were resolved
  • how the audit is adding value to the organization
  • the quality of the financial reporting process, including:
  • financial statement reporting risks
  • appropriateness of management’s judgments in preparing the financial statements
  • performance of management
  • reliability of other financial information

Delving into these topics and obtaining auditor insights can be a challenge. Different things work for different people, and there is no magic bullet to this process. However participants in our discussion agreed that what’s critical is an appropriate environment and trusting relationship between the auditor, the audit committee and, not to forget, management (the “three-legged stool”).

CPA Canada has taken inspiration from this experience. As a next step, we want to engage all three of these parties in the discussion. We also need to make sure the dialogue includes participants in all types and sizes of entity: listed and private companies, those in the public sector and those across different geographical areas and industries. After all, in order to unlock the value of audit, the stool must be balanced. Stay tuned to CPA Canada for developments on this project, in the coming months.

Keep The Conversation Going

Share your experiences in unlocking value from the audit. Let me know if you would be interested in participating in our discussions.

Post a comment below; or email me directly.

CPA Canada’s Audit Quality Blog is designed to create an exchange of ideas on developments and issues in global audit quality, as well as their impact in Canada.

About the Author

Eric Turner, CPA, CA

Director, Auditing and Assurance Standards, CPA Canada