Assurance Research Advisory Group (ARAG)

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The Assurance Research Advisory Group (ARAG), comprised of representatives from academia and public practice, funds research projects addressing private company1 assurance topics that are of interest to practitioners. Accounting educators who submit an approved research proposal are eligible for access to firm personnel, up to $15,000 in funding and, where applicable, access to peer reviewers or anonymized firm data provided by the AICPA Peer Review Program with firm consent. The research proposals funded by the AICPA will provide the profession with valuable insights into the factors that affect the quality of assurance services.

The Assurance Research Advisory Group is currently accepting submissions. Accounting educators are encouraged to review the request for proposals and submit a proposal through the online proposal submission form. In developing a proposal, researchers are encouraged to utilize the ARAG proposal template. For more information on the Assurance Research Advisory Group, review the FAQs

  • Request for proposals closes on September 28, 2018
  • Grants will be announced no later than February 28, 2019

1 Defined as entities not required to be audited in accordance with PCAOB auditing standards, including privately held companies, not-for-profit organizations, employee benefit plans and governmental entities.

If you are interested in conducting academic research on public company auditing topics, the Center for Audit Quality has two programs that might be of interest: Access to Audit Personnel and Research Advisory Board grants.

Research Topics

The AICPA is interested in funding projects that address research questions with a nexus to one of the topics listed below. These topics are solicited from various AICPA and state CPA society committees and are focused on domestic private company assurance engagements. The AICPA will also consider research proposals that are unrelated to the topics below but will support the ARAG's mission.

Audit Quality

Audit quality has been a focus in the United States and abroad for several years. The AICPA is interested in research into factors that affect audit quality, including but not limited to research focused on:

  • Utilizing data collected through a peer review questionnaire to identify meaningful correlations between firm characteristics and performance
  • The factors that have the greatest influence on quality in specialized audit segments (for example, financial institutions, employee benefit plan audits and single audits)
  • The relationship between adherence to the Quality Control Standards and the firm’s performance on assurance engagements
  • The factors that motivate an auditor to perform high-quality work
  • The role that professional skepticism plays in influencing the quality of an audit

Risk Assessment and Response

Risk assessment is one of the most common areas of non-conformity with auditing standards identified through the AICPA Peer Review Program. The AICPA is interested in research addressing this area, including but not limited to research that explores:

  • The factors driving non-conformity with AU-C 315 and 330, including the prevailing understanding in practice of:
    • The purpose of obtaining an understanding of the entity
    • The requirement to evaluate the design and implementation of controls
    • The meaning of “relevant assertion-” and “financial statement-level” risks and their impact on the audit
    • The assessment of inherent and control risk, their effect on the risk of material misstatement and what is required to assess them below “high”
    • The definition of a significant risk and the response that is required
    • What it means to respond to risks of material misstatement and the requirement to link that response to assessed levels of risk
  • The impact of a firm’s audit methodology on their collective understanding of the requirements of AU-C 315 and 330
  • How an accountant considers risk in limited assurance engagements
  • How an accountant considers risk when assurance is provided on non-financial measures (e.g., sustainability assurance engagements)

Materiality

The AICPA is interested in research into the concept of materiality and how it impacts the amount of evidence gathered in both audit and limited assurance engagements. This includes engagements where assurance is provided on non-financial information. Relevant research may explore:

  • Divergent practices in determining materiality and how they impact assurance quality
  • How an accountant considers materiality in limited assurance engagements
  • How an accountant considers materiality when assurance is provided on non-financial measures (e.g., sustainability assurance engagements)
  • How the accountant identifies the primary user(s) of the financial statements or non-financial information
  • How the accountant determines the benchmarks that are most relevant to the primary user(s)
  • In examination or review attestation engagements, what criteria practitioners use to evaluate whether presentation or disclosure misstatements or omissions, individually or in the aggregate, are sufficiently material to require a modification of the practitioner’s report
  • In financial statement audit or review engagements, what criteria auditors and accountants use to evaluate whether presentation or disclosure misstatements or omissions, individually or in the aggregate, are sufficiently material to require a modification of the auditor or accountant’s report

Levels of Assurance

There are different levels of assurance that an accountant may obtain when providing audit, examination or review services. An audit or examination engagement requires the accountant to design and perform procedures to obtain reasonable assurance. When performing a review engagement, the accountant is only required to obtain limited assurance, which is less than the high level of assurance obtained in an audit or examination engagement. Some practitioners have experienced challenges in applying these definitions in practice, resulting in disparity in the level of work performed in order to obtain the appropriate level of assurance. Supporting research in this area is a high priority for the AICPA, and there is specific interest in research addressing:

  • The perceptions of practitioners regarding the level of evidence required in order to obtain the desired level of assurance (reasonable or limited)
  • Potential approaches to reducing or eliminating disparate perceptions, if any
  • How an accountant considers risk in limited assurance engagements

Emerging Technologies

Emerging technologies are transforming how we work and live, and the market is seeking assurance on information not contained in traditional financial statements. The profession needs to prepare for these changes to meet clients’ needs, create value and continue to provide quality services. The AICPA is interested in research studying how emerging technologies will impact auditing and assurance in the future. Research interests include, but are not limited to, the following:

  • To what extent are private companies adopting blockchain technology, and how have audits been impacted?
  • To what extent are cryptocurrencies being utilized by private companies, and how has financial reporting been impacted? How are auditors auditing existence?
  • How are companies implementing maturity models, and what is the appetite of users for examination engagements covering maturity assessments?
  • For users of artificial intelligence, are the application controls functioning as intended?
  • What impact might emerging technologies have on the application of professional skepticism?

Specialization

Statement of Quality Control standard QC Section 10 paragraph .33 (“QC standards”) requires engagement partners to have the appropriate competence and understanding of the industry in which their client operates. The assurance space is vast, and with a rapidly evolving business environment, it can be challenging for practitioners to maintain the competency required to perform audits in numerous industries and areas. To comply with the requirements of the QC standards, commit to quality and maximize the value of their work, practitioners often find an audit niche in which they are highly competent and concentrate their practice on that industry or area. The AICPA is interested in research that explores the effect of practitioners’ specialization on the quality of private company assurance practices. Research interests include, but are not limited to, the following:

  • What matters more: overall experience in audit and assurance, or experience in specific industries or areas?
  • If specialization impacts the quality of assurance services, is that impact uniform across industries?
  • Do industry-specific risks influence the impact of specialization?