IRBA director Imre Nagy says it will help to identify where there may be risks in the audit market.
On Monday 2 December, the Independent Regulatory Board for Auditors (IRBA) launched its Feedback Report on Audit Quality Indicators (AQIs).
According to a statement announcing the launch, the report provides feedback on a set of measures that audit firms reported on to the regulator. It also provides audit committees with insight relevant to the appointment, performance, independence and reappointment of the auditor.
IRBA director of standards Imran Vanker said that IRBA believes this report and the agreed audit quality indicators will enable audit committees to compare audit quality related indicators of their auditors against others in the market. “This will contribute to formalising the review process between the audit committee and the audit firm and increase the transparency around audit quality at firm and engagement level,” Vanker said.
He said that IRBA also believes the report will assist audit committees and firms to have open conversations about audit quality and what changes could be put in place to satisfy the audit committee that the firm it engages can meet the audit committee’s requirements and quality management standards.
IRBA director of inspections Imre Nagy (pictured) said that IRBA currently follows a risk-based selection of engagements for inspections of audit quality which run on a three-year cycle. “However, as the AQI information will be delivered at least annually to the IRBA, we will also be able to develop a deeper understanding of where there may be risks in the audit market,” he said.
He added that:
“At the moment, all JSE-accredited audit firms have been included in the roll-out. Market participants like audit committees are encouraged to solicit this information directly from the current and prospective auditors to assist in their oversight of the external audit function.”