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