Audit Quality Monitoring Report 2020/21

PSAA approach to audit quality monitoring

  1. 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
    • effective relationship management
  1. 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

  1. 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, which commissioned the audit work covered by this review.

Table 2: IAASB Framework elements

Key element/PSAA test Adherence to professional standards and guidance Compliance with contractual requirements Effective relationship management
Values, ethics and attitude Y Y Y
Knowledge, skills, experience and time Y Y Y
Audit process and quality control procedures Y Y  
Auditors’ reports Y Y Y
Transparency reports Y    
Professional regulators’ reports Y    
Key interactions Y   Y

Source: PSAA

  1. Responsibility for providing audits of appropriate quality rests ultimately with an appointed auditor. However audit quality, efficiency and effectiveness are a shared responsibility across appointed auditors and audit firms, PSAA as Appointing Person, chief finance officers (CFOs) and audit committees, regulatory and supervisory bodies, the Comptroller & Auditor General (C&AG) and the National Audit Office (NAO), and government, specifically DLUHC. 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.

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