Auditees play a key role in the audit process and are an important factor in the audit quality equation. This section of the Auditee Resource Center covers why auditees should be concerned about audit quality, including the importance of having a quality audit, auditee factors affecting audit quality, and 5 steps to improve quality.
Importance of Having a Quality Audit
If your employer is a government, not-for-profit organization or for-profit organization, you already know about the reliance that the public and other stakeholders place on your organization and its activities, particularly if you receive governmental funding or participate in federal programs. If you are also responsible for procuring audit services for your organization, you have a vital fiduciary responsibility to ensure that your audit is of the highest quality. Independent audits of organizations like yours, including your financial statement and compliance audits (also commonly referred to as Yellow Book and single audits), are an important accountability mechanism. These audits provide a form of assurance to your management as well as regulators, taxpayers and donors that your entity is in compliance with certain laws and regulations governing the assistance you receive or programs in which you participate. Quality financial statement and compliance audits can help you:
- Fulfill your fiduciary responsibility
- Obtain assurance related to the financial integrity of funded programs
- Identify possible non-compliance and other issues early to avoid interruption of current funding;
- Lower the risk of future non-compliance
- Build goodwill among taxpayers, donors and other key stakeholders; and
- Strengthen your ability to secure additional funding in the future.
- Demonstration of the audit organization’s qualifications in response to your request for proposal;
- Experienced, qualified staff with appropriate technical abilities, particularly with Yellow Book and single audits if applicable to your audit engagement;
- Extent of the audit organization’s practice with organizations like yours (for example, governments or not-for-profits);
- Results of the audit organization’s external peer review; and
- Participation by the audit organization in quality improvement programs (for example, membership in the AICPA Governmental Audit Quality Center)
5 Steps to Improve Quality for Auditees to Consider
- Make sure the audit organization has qualified, knowledgeable staff with the right skills for your financial statement,Yellow Book or single audits.
- Grant your auditor access to all the necessary financial and program records and be sure to identify all governmental financial assistance and federal programs in which you participate
- Ensure that key staff personnel are available to your auditor.
- Be actively involved – take the initiative to understand what your auditor is doing and ask questions when you don’t.
- Make the most out of the exit process –ask questions about your auditor’s work, the audit opinion, and other compliance reports.