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The Audit Quality Forum (AQF): next steps, track record and legacy

Initiatives taken around audit quality in 2018 and onwards have a long history, and are embedded in the work of the AQF.  Most recently, the AQF has been looking at how auditors can help to improve confidence in business under the banner of ‘Helping business get it right’.

Audit is currently subject to a number of enquiries. We have the review of the Financial Reporting Council (FRC) by Sir John Kingman; the Competition and Markets Authority’s (CMA) study into the statutory audit market; and an enquiry into the future of audit by the Business, Energy and Industrial Strategy (BEIS) select committee.

Audit quality is critical to enhancing confidence in audited financial statements. Initiatives taken around audit quality in 2018 have a long history of being embedded in the work of the AQF. Most recently, the AQF looked at how auditors can help to improve confidence in business under the banner of "Helping business get it right’. This second programme of work kicked off in 2015. 

Before that, improving audit quality was the first priority when the AQF was formed in 2004 at the instigation of the UK Government and was supported by ICAEW, the FRC and BEIS. The AQF encouraged open and constructive dialogue about how to improve audit. This first programme of work lasted a full 10 years and produced a wealth of material which is available to users and is listed below.

The AQF’s track record: helping business get it right

At the end of 2017, three years’ work culminated in a series of thought-provoking debates at the Mansion House. These debates examined the role of auditors in the areas of prosperity, security, fairness and integrity. They also asked if we could confidently say yes to the question: “Do we still need auditors?”.

The increasing scrutiny of experts by the public, and what this meant for businesses who employ them, was the central theme of June 2017’s AQF event: “Believe me, I’m an expert”. In December 2016, the AQF asked: “How can business reduce inequalities?”. Further, in June 2016, the AQF focussed on the responsibility of business to society, particularly in terms of the payment of tax, and asked the question: “Is business paying its fair share of tax?”.

In November 2015 the AQF focused on the importance of getting business culture right and behaving in a socially acceptable way at its event “Whose culture is it anyway?”. And, at its 10th anniversary event, in March 2015 at the Mansion House, the AQF asked the question: “Can business ever get it right?”. Discussed was the proposition that business gets it right when it pays tax, makes money, looks after people, is transparent, innovates, creates new jobs and cares for the planet – and not one but all of these are important for business to get it right.

This whole second programme of work built on the work of the first phase undertaken by the AQF over the previous decade. 

The AQF’s track record: improving audit quality

The first AQF programme of work also had a varied remit. Having looked first at ways to improve shareholder involvement in audit, the AQF considered the fundamentals of high quality audit and whether, and how, international standards could help. It became clear that it was not possible to look at audit in isolation, which led to the evolution programme. This considered the impact of audit committees, stakeholder expectations and changes in financial reporting and audit practice.

By now, the AQF was an important international voice on audit issues and so its agenda broadened to look at global challenges. This culminated in a landmark paper on how to achieve international consistency in audit quality.

During this phase, the AQF also explored an agenda that led to the second phase relating to the reliability of audited financial statements, how auditors could respond to society’s expectations, and the burning issue of confidence in business.

The AQF’s legacy

The AQF has been prolific. Numerous reports have been published to document its work; these reports continue to inform auditors as they face ongoing challenges. This AQF body of work can be grouped as follows:

Shareholder involvement

The AQF looked at concerns relating to auditor competition and choice and the next steps that should be taken. It examined how shareholders could play a more active role. 

Reliability;

This area of work explored key aspects of reliability and the challenges they pose for auditors.

Evolution 

Under this body of work you will find content on the  impact of audit committees, stakeholder expectations and changes in financial reporting and audit practice.

Fundamentals 

Here, the AQF examined the relationships between shareholders, boards, auditors, regulators and other shareholders in the audit. 

Four papers provided the framework for the Audit Purpose published paper:

If you are interested in viewing recordings of any of the events, please email the Audit Quality Forum at AQF@icaew.com