PSAA approach to audit quality monitoring
Our approach is grounded in the International Auditing and Assurance Standards Board (IAASB)’s Framework for Audit Quality. This is widely regarded as a definitive statement on overall audit quality. We have taken the attributes the IAASB expects to be present in a quality audit and distilled them into three tests, which we use to consider the quality of audits and auditors under our contracts:
- adherence to professional standards and guidance;
- compliance with contractual requirements; and
- relationship management.
Table 1 shows the main evidence sources that PSAA uses to monitor audit quality for the three tests to provide a rounded view of audit quality.
Table 1: PSAA’s audit quality monitoring
| PSAA test | Evidence source |
| Adherence to professional standards and guidance | Professional regulatory reports; and Firm transparency reports |
| Compliance with contractual requirements | Contract performance indicators Method statement monitoring |
| Effective relationship management | Satisfaction survey scores |
Source: PSAA
The relationship between the IAASB framework and our audit quality monitoring arrangements is shown in Table 2 below. Audit quality formed a core part of the evaluation of tenderers in our 2017 audit procurement. Tenderers were encouraged to have regard to the IAASB Framework in the development of their submissions.
Table 2: IAASB Framework elements
| Key element/PSAA test | Adherence to professional standards and guidance | Compliance with contractual requirements | Effective relationship management |
| Inputs: | |||
| Values, ethics and attitude | Y | Y | Y |
| Knowledge, skills, experience and time | Y | Y | Y |
| Process: | |||
| Audit process and quality control procedures | Y | Y | |
| Outputs: | |||
| Auditors’ reports | Y | Y | Y |
| Transparency reports | Y | ||
| Professional regulators’ reports | Y | ||
| Key interactions | Y | Y | |
Source: PSAA
While responsibility for providing audits of appropriate quality rests ultimately with an appointed auditor, audit quality, efficiency and effectiveness are a shared responsibility: for appointed auditors and audit firms; for PSAA as Appointing Person; for chief finance officers (CFOs) and audit committees; for regulatory and supervisory bodies; for the Comptroller & Auditor General (C&AG) and the National Audit Office (NAO); and for government. The IAASB framework notes that all parts of the financial reporting chain have a role in contributing to and encouraging an audit environment that supports provision of an audit service of the expected quality.