The Role of the Audit Committee in relation to Audit Quality
29 September 2016
Under the Auditor Regulation Act 2011, the Financial Markets Authority (“FMA”) is required to ensure that a quality review of the systems, policies and procedures of licensed auditors and registered audit firms (i.e. those auditors and audit firms licensed to audit FMC reporting entities) is carried out at least once every four years. The FMA releases an annual report summarising the quality reviews that have been undertaken in the preceding year.
In December 2015 the FMA released its audit quality report for the year to 30 June 2015. This was the third annual report prepared by the FMA. During those three years, the FMA carried out at least one review of every registered audit firm.
Although the report principally provides information of relevance to auditors, the FMA considers that audit committees/directors of FMC reporting entities have an important role to play in ensuring high audit quality. Consequently, the FMA’s report includes a number of suggested improvements for audit committees. These suggestions are summarised in the table below:
Although the FMA’s suggestions specifically relate to the audit committees of FMC reporting entities, they are also relevant to the directors of any entity that is audited.
The full report is available here.
For more on the above, please contact your local BDO representative.