Comment Letter Enhancing Audit Quality in the Public InterestMay 16, 2016Download Comment Letter
Dear Professor Schilder,
Crowe Horwath International is delighted to present a comment letter on Enhancing Audit Quality in the Public Interest. Crowe Horwath International is a leading global network of audit and advisory firms, with members in some 130 countries.
We welcome the IAASB's initiative to lead a discussion about the relevance of Auditing Standards particularly in relation to audit quality and the public interest. Audit Standards have to adapt to changing circumstances and we observe that the IAASB is seeking to address concerns regarding the application of Standards that have been raised by firms and stakeholders. For many reasons, including increased adoption of the IAASB's standards, changes in regulation and technology, and the evolution of stakeholder expectations, the time is right for a through review of Auditing Standards.
This is an ambitious project. Although we understand why IAASB issued a single paper covering professional scepticism, quality control and the audit of groups, the large numbers of questions are challenging to respond to. In future, IAASB might seek to break ambitious projects like this into smaller components.
On page 3 of the Invitation to Comment there is a project timeline. It would be helpful if IAASB could develop this timeline to forecast when new and revised Auditing Standards are likely to be issued.
Our responses to the questions in the Invitation to Comment are given in the Appendix to this letter. From our detailed responses, we particularly draw attention to the following:
- ISQC 1 has many good features and has helped firms develop their quality control policies and procedures. ISQC 1 has been effective since 2009. The content of the standard has changed little, but there has been much change in the professional environment. For ISQC 1 to remain "fit for purpose" it requirements review and revision.
- IAASB has to consider the implications of rapid technological change in the performance of audit, and adapt its standards.
- IAASB has made a series of sensible initial proposals for the revision of ISA 600. The deficiencies in the current ISA 600 are widely recognised. IAASB is taking the right approach to developing a better standard that will help both group and component auditors in the performance of their engagements.
- Auditing Standards have to remain relevant to the performance of the audit of smaller entities. During the review process, IAASB should allocate time and resources to developing solutions that enable effective quality audits to be performed on smaller entities.
We trust that our comments assist the IAASB in its standard setting activities. We shall be pleased to discuss our comments further with you.
International Accounting and Audit Director