The Financial Reporting Council (FRC) is the peak body responsible for overseeing the effectiveness of the financial reporting system in Australia to which audit quality is integral. Accordingly, the FRC has a legislative mandate to monitor the quality of audits carried out by Australian auditors.
Audit quality can be challenging to define, measure and quantify.
The FRC is engaging with users of financial reports to better understand their views on audit quality, and to help identify if any actions are required.
Audit Committee Chairs (ACCs) play an integral role in the oversight of financial reporting and the performance and quality of their external auditor. In recognition of this, the FRC – in conjunction with the AUASB – asked ACCs to participate in a survey designed to gather their perspectives on audit quality. The survey results aim to better inform the FRC and help identify any appropriate actions.
This report details the results of this survey, as well as further insights on ACCs' perspectives on audit quality. This report aims to assist audit committees and auditors as they work together with the goal of improving audit quality, and ultimately the integrity of financial reporting.
We thank the ACCs who completed this survey and for generously sharing their views and experiences.
Survey participants
Ninety-one ASX top 300-listed company ACCs completed this survey and provided comments to share further insights into the factors they considered when assessing their auditor.
This enabled us to capture insights into why they rated audit quality as it is, best practice examples, as well as areas for improvement.
Methodology
The UK Financial Reporting Council conducts a regular ACC Survey. In order to achieve a direct comparison to UK ACCs' perceptions of audit quality, we elected to replicate specific questions used in their survey.
This is the first survey of this type that we have conducted in Australia. In light of the current focus on audit quality, it is our intention to conduct them periodically as a means of continuing to track the views of ACCs.