ASIC has released information to help directors and audit committees develop robust standards as part of its commitment to improve audit quality.
Information Sheet 196 Audit quality: The role of directors and audit committees explains:
- why audit quality is important
- the responsibilities of the auditor
- the roles of directors and audit committees
- the responsibilities of directors for auditor independence
- who should manage the appointment of auditors
- what matters should be considered in setting audit fees, and
- what directors and audit committees can do to promote audit quality.
How this can help your NFP?
- The quality of the independent audit process supports confidence in the quality of financial reports.
- Audit is important to NFP companies, so they can obtain funding and conduct business, and so that stakeholders (such as donors, Government and corporate partners) are confident and informed.
- The quality of audits is also important to a wider group of stakeholders, such as creditors.
INFO 196 suggests directors and audit committees consider:
- non-executive directors recommending auditor appointments and setting audit fees
- assessing the commitment of the auditors to audit quality
- reviewing the resources devoted to the audit, including the amount of partner time and the use of experts
- accountability within the audit firm for quality
- support by company management for the audit process
- two-way communication with the auditor on concerns and risk areas
- ensuring independence of the auditor, and
- reviewing audit firm responses to findings from ASIC audit inspections
A copy of INFO 196 can be found at : http://www.asic.gov.au/asic/asic.nsf/byheadline/Audit-quality–The-role-of-directors-and-audit-committees+?openDocument