Auditing Report: IAASB Framework, Quality Assurance, EAQ Analysis

This report delves into the multifaceted world of auditing, commencing with an analysis of the IAASB (International Auditing and Assurance Standards Board) framework. It elucidates the framework's core elements, encompassing inputs, processes, outputs, stakeholder interactions, and contextual factors, emphasizing their collective impact on audit quality at various levels. The report then transitions to quality assurance auditing, highlighting its significance in maintaining the credibility of audit reports and addressing the challenges associated with ensuring compliance with documented standards, particularly in the face of increasing complexity and regulatory demands. It underscores the importance of automating audit tasks to mitigate risks and improve efficiency. Finally, the report examines activities involved in enhancing audit quality (EAQ), including peer review, adherence to standards and ethics, enforcement mechanisms, pre-licensure skills development, and the monitoring of future practices, emphasizing their role in promoting service quality and supporting auditors in delivering high-quality audits that benefit businesses, investors, and the public.

Running head: AUDITING
Auditing
Name of the students
Name of the university
Author note

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Answer (a)
The IAASB (International auditing and assurance standards board) implemented the
framework for the purpose of quality of audit and stated the process, input and output as the
key elements for the audit quality at audit firms, engagements and national levels for the
audits of financial statements. This framework also reveals that the proper communications
among the stakeholders of the company are extremely important (Knechel et al. 2016). The
IAASB further acknowledges that the main purpose of the audit is to increase the confidence
of the potential users of financial statement and it is attained through gathering the required
evidence of audit with respect to express the opinion regarding whether financial statements
of the company prepared with all the material aspects and as per the applicable framework for
reporting or not. Though it is not easy to define the term audit quality, for IAASB it is the key
element used to create the environment that maximizes the chances of performing the quality
audit on consistent basis. Major elements for the audit quality are recognized by the
framework are – (1) Inputs (2) outputs (3) process (4) major interaction under the supply
chain of financial reporting and (5) contextual factors (Asthana and Boone 2012).
Inputs are segregated as the input factors such as – (1) attitudes, ethics and values for
the auditors that are influenced by culture existed in the audit firm (2) experience, knowledge
and skills of auditors and allocated time for performing the audit. under these input factors,
the quality elements are organized among those which are directly attributable to - (1)
engagement level of the audit (2) jurisdictional or national level and in the audit firms those
are operating in the nation and audits undertaken by them (3) level of the audit firm and
audits undertaken by them (Gunny and Zhang 2013).
Process states that the rigidity of audit procedure and the quality control process have
an impact on the quality of audit.

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Outputs involve the information and reports formally presented and prepared by one
party to another and output from auditing process that are not visible generally to outside of
the audited company. For instance, these may involve the improvements to the practices of
financial reporting and the internal control over the financial reporting which may be derived
from the findings of the auditor. Further the audit outputs are generally determined by context
that includes the requirements from the legislation (Minutti‐Meza 2013). While the
stakeholders have an influence on the characteristics of outputs, others have little influence.
However, for some of the stakeholders like investors under the listed organizations, report
from the auditor is primary output.
Under the supply chain of financial reporting the stakeholders are the management,
users who are charged with the regulators and the governance. While every shareholder under
the supply chain has great impact on supporting the high quality of the financial reporting and
the way in which shareholders interact with the audit quality. These informal as well as
formal communications are influenced by the context with respect to which audit is carried
out. It allows the dynamic relationship that may exist among outputs and inputs. For instance,
the discussions among the audit committee and the auditor of any listed company at planning
stage will have an influence on the usages of the input that is the specialist skills and the
content and form of the report of the auditor with respect to those which are charged with the
output that is the governance. On the contrary, for the businesses that are privately owned
frequent informal communications may be there that may contribute to the quality of audit.
Various contextual or environmental factors like regulations, corporate governance
and laws have potential to affect the quality and nature of the financial reporting of the audit
quality whether directly or indirectly. Under these circumstances, frequent informal
communications may be there that contributes to the audit quality. The auditors respond to
the mentioned factors while determining the best level of obtaining the appropriate and

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sufficient audit evidence. As per the IAASB, while quality of the individual audit is
influenced by outputs, inputs, processes and the framework interactions, the audit quality
framework is not sufficient for evaluation of the quality of individual audit. The reason
behind this is that the detailed consideration is required for the matters like timing, nature and
extent of the audit evidence that is obtained with respect to risks associated with the material
misstatement in any particular company, the exactness of relevant audit judgements and are
complied with the relevant standards.
Answer (b)
An important asset for the audit activity is the credibility of the report to the
shareholders. For providing the constructive challenges and credible assistances to the
management the auditors the auditors shall be perceived as the professionals. The
professionalism requires the confirmation to professional standards set. With the increase in
the complexity with regard to the expanding globalizations and regulations, it is quite obvious
that the companies will feel overwhelmed while the quality assurance auditing is considered.
The concept of Quality assurance auditing is broadly used with regard to the customers,
external and internal audits for computing the quality assurance within the enterprise. The
biggest challenge for the effective assurance of quality is to assure that the process of
correctly mirroring the documented standards (Kwon, Lim and Simnett 2014). Owing to the
research cycle or single development for the manufactured product may result into the
abundance of the forms and documents that the companies establish through the department
of quality assurance. Further, it is crucial to audit the procedures of quality assurance
regularly to evaluate the effectiveness of the procedures by the management.
Conducting the quality assurance audit is not an easy process, specifically when the
multiple stages are involved in the audit span. Further, manually scheduling the audit

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activities may make the process more complicated and results into overlooking some tasks
involved in the audit programme. The entire stage of the audit is missed which in turn, results
into inaccurate outcome. For avoiding the situation, the tasks of the audit must be automated
that will eliminate the risks associated with overlooking the tasks under the audit planning.
However, the auditors may schedule multiple programmes for auditing simultaneously that is
to be executed without making any compromise in the audit quality or without having any
negative impact on the findings. The auditing related to quality assurance focuses on the
compliance with the guidelines and regulations that are set by the regulatory agencies (Memis
and Cetenak 2012). The companies shall be organized centrally and store the forms and
documents securely as per the requirements of the regulations in the way that will influence
the effective quality assurance. Storing the documents electronically in the virtual vaults will
assist to organize the information and data in better ways.
Further, the audit findings shall be tracked through the advanced forms of tracking.
This will enable the auditor monitoring the real-time audit results. The generated results will
be used as basis for the purpose of generating different reports that will state the actual state
of business to the management of top level. Further, the system may be configured for
automatically launching the processes for rectifying the issues that will surface as the audit
result. As the auditing associated with the quality assurance focuses on various risks that may
threat the businesses of the company, it will also provide the management with the ways for
prioritizing the risks as per the specific areas of business and the impact level (Deumes et al.
2012). Therefore, the organizations will be able to sustain and attain the level of audit
readiness in better way. Further, the transparency of the solution will also enable the
management to oversight and assist in various types of organizations to achieve their goals
regarding quality.

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Answer (c)
Assurance and audit of the financial statement plays important role for the company
as well as the society. As the regulatory environments and the business evolves are becoming
more complex in nature, the commitment to the performance of quality audits are becoming
more essential. Various activities involved with the enhancement of audit quality (EAQ) are –
(1) Peer review (2) standard and ethics (3) enforcements (4) pre-licensure (5) monitoring
practice for the future (6) documentation
Peer-review is the main activity of EAQ as it reinforces the compliance with the
independence, auditing and standards of quality control. Through the personal connections of
the companies, the peer reviewers generally positioned in unique way for carrying out the
quality messages and assisting the firms in addressing the concern issues. However, if the
peer reviewers cannot detect the areas where the audits do not comply with the professional
standards, the reviewers may leave the firms with an impression that the prevalent challenges
regarding the quality may not pertain with that which in turn, may not recognize the
opportunities of the form where the performance can be improved (Eshleman and Guo 2014).
Most common issue regarding the quality is the enhanced oversight is not adequate or
audit is not documented that indicates the procedures of auditing were not performed or if
performed it is not documented as per the standards. For obtaining the sufficient and
appropriate audit evidence required for supporting the opinion of audit the auditors shall
comply with the audit documentation. As per the standards, the written documentation shall
be sufficiently detailed for giving the experienced auditor who was not involved in the audit
previously and the clear understanding with regard to the work performed the evidences that
were obtained and the conclusions that were obtained (Burnett et al. 2012). As per the
standard, the auditor is required to document the – (1) timing, extent and nature of the

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procedures (2) any significant issues, findings and the professional judgements (3) results of
the evidences and procedures obtained.
Another required activity for audit quality is to follow the ethics and standards to
assure the audit quality that will make the report of the auditor more relevant and
communicative. In the year 2014, recognition for Code of Professional conduct was
completed by the AICPA with the objectivity and integrity to maintain the independence and
exercise the competence and professional care while performing the audit and attest the client
services (Lennox, Wu and Zhang 2014).
Pre-licensure is the step required for improving the skills that includes updating the
skills to enhance the assessment concerning the higher order like critical thinking and
scepticism to establish and implement the recommendations to concentrate in the audit that
will accept the audit procedures to be acceptable at all over the nation (Tepalagul and Lin
2015).
Practising the monitoring of future involves the initiative designed for promoting the
discussions regarding how the practice shall be monitored may involve into the technology
based system which will enable the firms to recognize and correct the potential issues in the
future real time. With more transparency and consistency under the valuation procedure, the
auditors will be able to review the valuations that are performed by the credential holders that
can assess the work more effectively for determining the fair value measurements (Firth, Rui
and Wu 2012).
The enforcement states that the members from AICPA are involved in the violation
of code of professional conduct that is subjected to the disciplines and remediation including
and up to the expulsion from the membership of AICPA. Further, the AICPA is collaborating

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with the NASBA on the initiatives for supporting the work of the Accountancy State Board
jointly (López and Peters 2012).
Therefore, enhancing the quality of audit is the comprehensive, strategic commitment
to promote the service quality. Through the maintenance of audit quality, the auditors can
achieve the improvement in the quality and enhanced performance. As the EOQ supports the
auditors to improve the quality of the audit, the auditors in turn will be able to support the
owners from small businesses, the public, the investors and many more with the valuable and
trusted services.

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References
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