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AAA M1d

The document outlines a framework for audit quality, detailing key elements that contribute to an environment conducive to high-quality audits. It emphasizes the importance of values, ethics, compliance with regulations, and the interactions among management, users, and regulators in the financial reporting supply chain. Additionally, it highlights contextual factors that affect audit quality, such as laws, business practices, and corporate governance.

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D Ho
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3 views

AAA M1d

The document outlines a framework for audit quality, detailing key elements that contribute to an environment conducive to high-quality audits. It emphasizes the importance of values, ethics, compliance with regulations, and the interactions among management, users, and regulators in the financial reporting supply chain. Additionally, it highlights contextual factors that affect audit quality, such as laws, business practices, and corporate governance.

Uploaded by

D Ho
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Advanced Audit and Assurance

Module 1
Audit quality
Drivers of audit quality

Published by IAASB
A Framework for Audit Quality: Key Elements
that create an Environment of Audit Quality

Source: CPA Australia 2023, Advanced Audit and Assurance


Study guide, 6th edn, Figure 1.3, p.26.
Framework for audit quality-Part 1
Values and
APES 110
ethics
Inputs
Knowledge, skill,
ISQM 1
experience

Complying with
ISA 220 and
audit process
other ISAs
and quality
Part 1 Process
Complying with
laws and Corporations Act
regulations

Auditor's report

Management
Output Reports
report

Audit firm's
transparency
report
Framework for audit quality-Part 2
Part 2: Key Interactions within the Financial Reporting supply Chain

Source: International Auditing and Assurance Standards Board (IAASB) 2018, Framework for Audit Quality: Key Elements That Create an
Environment for Audit Quality, p.20
Framework for audit quality-Part 2
Part 2: Key Interactions within the Financial Reporting supply Chain

Those charged with


Management Users Regulators
governance (TCWG)
• Preparation of • Overseeing strategic • Appoint/re-appoint • Different types e.g.
financials direction of entity auditors financial market and
• Implementation of • Overseeing financial • Probe the rationale prudential regulators
internal controls reporting process for a change in • Regulators with
• Compliance with • Open auditor direct oversight over
financial reporting communication with • Attend presentations audit firms
framework auditors at AGM or • Open
• Provide audit • Auditor to equivalent regarding communication
information communication with financial statements required between
• Transparent and TCWG on planning relevant parties.
open communication matters and
with auditors significant findings.
• Enhance audit
quality by creating
environment that
encourages
collaboration
Framework for audit quality-Part 3
Part 3: Contextual Factors
Contextual factors

• Financial Reporting Framework


• Laws and regulation
• Business practices and commercial law
• Audit regulation
• Litigation environment
• Attracting talent
• Financial reporting timetable
• Broader cultural factors
• Information systems
• Corporate governance

Source: International Auditing and Assurance Standards Board (IAASB) 2016, Framework for Audit Quality: Key Elements That Create an
Environment for Audit Quality, p.29 https://www.ifac.org/system/files/publications/files/2016-2017-IAASB-Handbook-Volume-3.pdf
Quiz – Client assessment
Your client Precious Mining recently acquired Gollum Iron Ore Group, a large
entity with significant operations across all continents. Which of the below
steps is necessary?

Decline to perform the audit as fees and other remuneration are likely to be increase by

more than 15% of firm’s revenue.

Consider whether ASAs’ are applicable since newly acquired organisation has operations

outside Australia.

Perform partner rotation to demonstrate compliance with QC policies since nature of client

has changed.

Perform additional client evaluation procedures to evaluate continuance of the client.

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