The role of directors and audit committees: ASIC guidance on audit quality

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