In May 2014, the AICPA launched the Enhancing Audit Quality (EAQ) initiative designed to promote continuous improvement in the quality of audits. As part of this initiative, this document was issued by the AICPA on May 14, 2015, titled Enhancing Audit Quality, A 6-Point Plan to Improve Audits. It is further described as “The U.S. CPA profession’s answer to quality financial statement audits of private companies, employee benefit plans and governmental entities.”
An outline of the 6-point plan contained in the foregoing document is as follows:
- Pre-Licensure. Next version of CPA Exam is designed to increase assessment of higher-order skills, such as critical thinking and professional skepticism; high school AP accounting course; changes to college-level accounting education; additional doctoral-level audit professors with practical experience.
- Standards and Ethics. Quality control standards implementation support; evaluation of clarified standards implementation; auditor’s report revisions; ethics code codification.
- CPA Learning and Support. Competency models for audits, including employee benefit plan and governmental, competency assessment tools, targeted resources to develop competencies; certificate programs to demonstrate competence; nano, blended and informal learning programs; Employee Benefit Plan and Governmental Audit Quality Centers’ resources, tools and training; Center for Plain English Accounting; audit guides, risk alerts and practice aids.
- Peer Review. Focus on greater risk industries/area, including EBP and Single Audits; more significant remediation including pre-issuance reviews and aggressive follow-up; root cause analysis (for poor and good quality); termination from peer review after repeat quality issues.
- Practice Monitoring of the Future. Long-term initiative for near real-time, ongoing monitoring of firm quality checks using robust technological platform.
- Enforcement. Aggressive investigation of all referrals of deficiencies; enhanced coordination with state boards of accountancy having ability to restrict license to practice; reinforced Code of Professional Conduct rules on Due Care.