A Framework for Understanding and Researching Audit Quality

June 2011 IAASB Discussion 1. At the June 2011 meeting, the IAASB considered a first draft of the Audit Quality Framework (" Framework ") paper. The IAASB expressed strong support for a holistic approach to the development of the proposed Framework. Amongst other matters, suggestions were made for the paper to give greater recognition to the dynamism of audit quality (AQ), to recognize the influences of technology and industry circumstances as important additional contextual factors, to further consider the linkages with efficiency and cost, and to reconsider the AQ schematic so that it more effectively articulates the various elements of the Framework and the Framework's dynamism. 2. On the basis of this input and as agreed by the IAASB, the Task Force developed a revised draft of the Framework paper (the " CAG Draft " − see Agenda Item 6-F) for purposes of soliciting initial reactions and input from specific stakeholder groups in Q3-Q4 2011. 3. Key highlights of the discussions with stakeholders on the CAG Draft are set out below. representatives of the Task Force met six very experienced academics (four from the U.S., one from Australia, and one from Canada) in Denver on August 7 th to discuss the CAG draft. The meeting was arranged by Board member Bill Kinney, who was one of the participants. The academics seemed genuinely interested in the project and made a number of constructive suggestions as to how the Framework might be improved. A number said they struggled with understanding the current model. An alternative structure was suggested which is more consistent with the way the topic has been treated in a number of recent studies. 1 September 2011 IAASB CAG Meeting 5. Some CAG representatives welcomed the project and were broadly supportive of the CAG draft, with some commenting that it was well balanced and thoughtful. 6. One CAG representative, however, took a different position and criticized the paper for dealing with systemic issues rather than focusing on audit quality at the engagement level. A number of other CAG representatives agreed that poor contextual factors such as weak corporate governance cannot be used as an excuse for a poor quality audit. Several thought that the Framework should focus more on factors that auditors can control. 7. Some CAG representatives expressed concern that too much emphasis was placed on efficiency in the proposed Framework and were of the view that more of …

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