In considering information gathered through the process of evaluating the
independent auditors, it is important that the audit committee give consideration
to the source of the information. For example, if the chief financial officer
(CFO) or controller comments that he or she believes the auditors went too
far in certain areas, that would probably carry less weight in audit committee
deliberations than if the CFO or controller comments that certain areas were
not tested adequately. As with all deliberative processes, the audit committee
should consider the different perspectives and motivations of those having
input into the deliberations.
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Evaluation of the Independent Auditors
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Yes
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No
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Not Sure
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Comments
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Questions for Audit
Committee Members
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- Did
the auditors meet with the audit committee when requested?
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- Did
the auditor address issues of tone at the top and antifraud programs
and controls in place in the organization?
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- Did
the auditors inform the audit committee of any risks of which the
committee was not previously aware?
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- Did
the auditor adequately discuss issues of the quality of financial
reporting, including the applicability of new and significant accounting
principles?
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- Did
the auditor communicate issues freely with the audit committee, or did he
or she seem protective of management?
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- Does
it appear that management exercises undue influence on the independent
auditors?
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- Does
it appear that the independent auditors are reluctant or hesitant to
raise issues that would reflect negatively on management?
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- Is
the audit committee satisfied with the planning and conduct of the
audit, including the financial statements and internal control over
financial reporting (as applicable)?
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- Is
the audit committee satisfied that the independent auditor remains
independent and objective both in fact and appearance?
- Review all audit-related and nonaudit services
conducted by the independent auditor in the prior year.
- Review whether the firm, the office or the partner
is dependent on the organization for a material percentage of its fee
income.
- Review whether former members of the audit team
are now employed by the organization.
If any of these conditions exist, the audit committee
should consider whether they impair the independence with respect to the
organization.
(See tool Independence and Related Topics: Conflict of Interest, Related Parties, Inurement, and Other Issues.)
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- a.
How is the concurring partner (if applicable) compensated?
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b. Is
the concurring partner protected in the event a tough call needs to be
made?
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- Is
the audit committee satisfied with its relationship with the auditors? In
making this determination, the audit committee should consider ( a )
whether the partner-in-charge of the audit participated in audit committee
meetings, ( b ) whether the auditors were frank and complete in
the required discussions with the audit committee, ( c ) whether
the auditors were frank and complete during executive sessions with the
audit committee, ( d ) whether the auditors are on-time in their
delivery of services to the organization.
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- Was
the audit fee fair and reasonable in relation to what the audit committee
knows about fees charged to other nonprofit organizations, and in line with
fee benchmarking data the audit committee might have available to it?
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- Did
the independent auditors provide constructive observations, implications,
and recommendations in areas needing improvement, particularly with respect
to the organization's internal control system over financial reporting?
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- Did
the independent auditors demonstrate an ongoing understanding of the uniqueness
of nonprofit organizations, especially those operating in the sector of
this organization?
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Following are some
questions the audit committee should ask different individuals in the
organization to assist in evaluating the performance of the independent
auditors.
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Executive Director
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- From
your perspective in working with the independent auditors, are you satisfied
with the scope, nature, extent, and timing of testing performed by the independent
auditors?
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- Are
you satisfied with the knowledge, skills, and abilities of the staff assigned
to the audit work?
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- Are
you satisfied with the engagement leadership assigned, including the partner(s),
manager(s), and fieldwork leaders?
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- Did
the independent auditors provide constructive observations, implications,
and recommendations in areas needing improvement, particularly with respect
to the organization's internal control system over financial reporting?
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- a.
If the choice were yours, would you hire the firm to conduct next years
audit?
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b. If yes, are there
any changes you would make?
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- Are you satisfied with the quality and quantity of information provided by the independent auditors relative to the general progress of the audit?
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- Were identified problems or potential issues brought to your attention in sufficient time to be addressed without delaying or extending the completion of the audit?
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Chief Audit Executive
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- From
your perspective in working with the independent auditors, are you
satisfied with the scope, nature, extent, and timing of testing
performed by the independent auditors?
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- Did
the independent auditors work with you to ensure the coordination of
audit efforts to assure the completeness of coverage, reduction of
redundant efforts, and the effective use of audit resources?
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- a.
Are you satisfied with the knowledge, skills, and abilities of the staff
assigned to do the audit work?
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b. Are you satisfied with
the engagement leadership assigned, including the partner(s), manager(s) and
fieldwork leaders?
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- a.
Did the independent auditors work with the internal auditors according
to the plan?
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b. Was cooperative work
conducted in the spirit of professionalism and mutual respect?
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c. Are you satisfied with the quality and quantity of information
provided by the independent auditor relative to internal audits performance
related to the audit?
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- Are
you satisfied that the independent auditor remains independent of the
organization in spite of any audit-related, or nonaudit services the
auditor provides to the organization?
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- a.
Are you aware of any other information that might impair the
independence of the independent audit firm?
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b. Are you aware of any
individuals on the audit team that might not be independent with respect to
the organization for whatever reason?
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- a.
If the choice were yours, would you hire the firm to conduct next years
audit?
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b. If yes, are there
any changes you would make?
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CFO (or Finance Director)
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- From
your perspective in working with the independent auditors, are you
satisfied with the scope, nature, extent, and timing of testing
performed by the independent auditors?
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- Are
you satisfied with the knowledge, skills, and abilities of the staff
assigned to the audit work?
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- Are
you satisfied with the engagement leadership assigned, including the
partner(s), manager(s), and fieldwork leaders?
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- Did
the independent auditors provide constructive observations,
implications, and recommendations in areas needing improvement,
particularly with respect to the organizations internal control system
over financial reporting?
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- a.
If the choice were yours, would you hire the firm to conduct next years
audit?
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b.
If yes, are there any changes you would make?
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- Are you satisfied with the quality and quantity of information provided by the independent auditors relative to the general progress of the audit?
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- Were identified problems or potential issues brought to your attention in sufficient time to be addressed without delaying or extending the completion of the audit?
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Controller (or Chief Accounting
Professional)
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- From your perspective in working with the independent auditors, are you satisfied with the scope, nature, extent, and timing of testing performed by the independent auditors?
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- Are you satisfied with the knowledge, skills, and abilities of the staff assigned to the audit work?
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- Are you satisfied with the engagement leadership assigned, including the partner(s), manager(s), and fieldwork leaders?
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- a.If the choice were yours, would you hire the firm to conduct next years audit?
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b. If yes, are there
any changes you would make?
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- Are you satisfied with the quality and quantity of information provided by the independent auditors relative to the general progress of the audit?
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- Were identified problems or potential issues brought to your attention in sufficient time to be addressed without delaying or extending the completion of the audit?
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Other Comments, Further Questions
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