New guidance on assessing the external auditor
The Center for Audit Quality (CAQ) has released new guidance for audit committees that will assist them in their oversight of the external auditor.
However, should the fox advise on its own oversight? The CAQ is an arm of the AICPA and while the guidance is useful, it is not independent.
My advice is for the audit committee to engage with the internal auditor to develop a robust process for assessing the performance of the external auditor. In addition to the questions in the CAQ guide, the committee should consider:
- Whether the external auditor has adopted an appropriate attitude for working with the company, including management and the internal auditor
- Whether the auditor has taken a top-down and risk-based approach that focuses on what matters and not on trivia, minimizing both cost and disruption
- Whether issues are addressed with common sense rather than a desire to prove themselves
I welcome your comments.