Introduction

The highest standard of quality in the provision of professional services is imperative for the chartered accountancy profession; and even more so for those Chartered Accountants who are also Registered Auditors.

Audit quality is essential to the fulfilment of the objectives on an independent external audit. Consistent and sustainable high audit quality contributes to ensuring the continued relevance and value of audit and assurance services; which in turn are essential in providing trust and confidence to the users of historical financial information, and increasingly also to users of information other than historical financial information.

The IAASB Framework for Audit Quality describes the term audit quality as encompassing certain key elements that create an environment which maximizes the likelihood that quality audits are performed on a consistent basis.

International Standard on Quality Control 1 (ISQC 1) deals with a firm’s responsibilities for its system of quality control for audits and reviews of financial statements, and other assurance and related services engagements. The ISQC is to be read in conjunction with relevant ethical requirements.

International Standard on Auditing 220 (ISA 220) deals with the specific responsibilities of the auditor regarding quality control procedures for an audit of financial statements. It also addresses, where applicable, the responsibilities of the engagement quality control reviewer.  ISA 220 is also to be read in conjunction with relevant ethical requirements.

Recent Developments

• SAICA Communication: Global Inspection Findings – A Reference Point to Enhance Audit Quality (12 March 2018)
• IFIAR released its 2017 Inspection Findings Survey Report – Released (8 March 2018)
• 2018 Feedback on the IAASB's quality control project - Information Session (22 February 2018)
• IAASB Webcast: Proposed Changes to International Standard on Quality Control  ( 21 September 2017)
• IFAC publishes an article on Root Cause Analysis is Transforming Audit Quality
• SAICA FAQs on the application of the ISAs on matters arising from monitoring findings and other in-practice challenges
• Video recording: IAASB’s in SA: Update on Enhancing Audit Quality projects (4 May 2017)
• SAICA Communication: IRBA Inspection Findings – A Further Reference Point to Enhance Audit Quality (22 March 2017)
• IRBA Communiqué: IFIAR issues Report on the 2016 Global Inspections Findings Survey ( 10 March 2017)
• SAICA Communication: Global Inspection Findings – A Reference Point to Enhance Audit Quality (6 March 2017)
• IFIAR released its 2016 Inspection Findings Survey Report (3 March 2017)
• SAICA Comment Letter on the IAASB’s ITC, Enhancing Audit Quality in the Public Interest: A Focus on Professional Skepticism , Quality Control and Group Audits
• Other Comment Letters on the IAASB’s ITC, Enhancing Audit Quality in the Public Interest: A Focus on Professional Skepticism, Quality Control and Group Audits
• Video Supplement to the ITC, Enhancing Audit Quality in the Public Interest In this video (issued on 28 April 2016 ) the IAASB reviews the key elements of the ITC, Enhancing Audit Quality in the Public Interest and the ITC Overview.
• IFIAR released its 2015 Inspection Findings Survey Report on 3 March 2016 The survey results indicate that the pace of audit quality improvement is too slow and calls for a measurable improvement by 2019.
• IAASB Invitation to Comment (ITC), Enhancing Audit Quality in the Public Interest  In this ITC (issued on 17 December 2015) the IAASB focuses on and is seeking comments on three of its priority projects, namely Professional Skepticism, Quality Control, and Group Audits. Comments are due by 16 May 2016.  Below is the link to the templates for use to facilitate responses to the ITC:
  • Template for ITC Responses
  • Template for Overview Responses

Standards and Pronouncements

IAASB 2015 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements from the IAASB

• ISQC 1 - Quality control for firms that perform audits and reviews of financial statements, and other assurance and related services engagements
• ISA 220 - Quality control for an audit of financial statements
• IAASB Framework for Audit Quality (February 2014)
• IAASB Framework for Audit Quality (February 2014) – At a Glance

[Note that the above are specific quality control standards, but that the topic of quality control is also addressed in individual review, other assurance and related services standards available in the IAASB Handbook]

Guides and Circulars

• IFAC SMP Committee Guide to Quality Control for Small and Medium-Sized Practices (3rd edition)

Monitoring of Quality

South Africa – Independent Regulatory Board for Auditors (IRBA)

• IRBA Public Inspections Report - 2019
• IRBA Public Inspections Report - 2018
• IRBA issues Practice Alert: Companies Act Section 90(2)(b)(iii)
• IRBA issues Inspections Strategy and Process - Seventh Inspections Cycle
• IRBA 2017 Public Inspections Report released
• IRBA news#39: Audit Evidence on the Audit File for Approved Audit Reports and Annual Financial Statements  
• IRBA news#41: The IRBA enters its Seventh Inspection Cycle
• IRBA  news#42: Inspection information on: Practice Alert and IRBA Inspections Report shows recurring Themes that require improvement
• IRBA News #37: An alarming increase in improper modification of audit documentation (50Kb PDF)
• IRBA Public Inspections Report 2016 (16 March 2017)
• IRBA Press Release: IRBA Inspections Report shows decline in audit quality
• IRBA Communiqué: IFIAR issues Report on the 2016 Global Inspections Findings Survey (10 March 2017)
• Feedback on the IRBA Pro Forma Inspections of the New Auditor's Reports
• Extract from the Auditing Profession Act, 2005 : Legislative mandate to perform inspections      
• Extract from the IRBA Manual of Information: Inspections                          
• IRBA Public Inspection Report 2014/2015 – Striving for consistent sustainable high audit quality (3 December 2015)        
• IRBA Press Release to accompany Public Inspections Report 2014/2015 – Calling Boards and Audit Committees to Action in Strengthening Audit Quality in South Africa (3 December 2015) 
• Inspections Findings Newsflash – Most common engagement inspection findings in the quarter ending June 2015 (12 November 2015)
• Inspections Findings Newsflash – Remedial Action Process (6 August 2015)
• Inspections Findings Newsflash – Findings on non-documentation and/or a lack of sufficient and appropriate audit evidence in respect of property, plant and equipment completeness and inappropriate direction of testing for completeness of revenue (28 May 2015)
• Inspections Findings Newsflash – Root-cause analysis and appropriate remedial action (17 March 2015)

[Additional information with respect to inspections can be found on the IRBA website]

International Forum for Independent Audit Regulators (IFIAR)

• IFIAR 2019 Inspection Findings Survey – Released 17 February 2020
• IFIAR 2018 Inspection Findings Survey – Released 16 May 2019
• IFIAR released its 2017 Inspection Findings Survey Report – Released (8 March 2018)
• 2016 Inspections Findings Survey (3 March 2017)
• 2015 Inspections Findings Survey (3 March 2016)
• Inspections Workshops Working Group – Members and activities
• 2014 Inspection Findings Survey (3 March 2015)

[Refer to the IFIAR website for additional information and resources]

SAICA communications and resources

• SAICA Article: IRBA Feedback Report on AQIs
• 2018 IRBA Public Inspections Report - Information session
• SAICA Article: Audit Quality Indicators - A tool to measure Audit Quality
• SAICA Information Session: How a lack of documented evidence can trip you up
• 2018 Feedback on the IAASB's quality control project - Information Session (22 February 2018)
• IRBA Root Cause Analysis of Inspection Findings: Information Session - video recording and presentations 
• SAICA recording (17 March 2016): 2016 Enhancing Audit Quality - The IAASB's ITC (Introduction to the IAASB’s ITC)
• SAICA Recording (29 January 2016):  The IRBA’s Public Inspections Report 2014/2015 – Willie Botha, SAICA Senior Executive Assurance & Practice interviews Bernard Agulhas, IRBA CEO and Imre Nagy, IRBA Director Inspections
• SAICA Communication (4 December 2015):  In the interest of audit quality – focus on inspections findings