The US Center for Audit Quality (CAQ), an organisation affiliated with the American Institute of CPAs, has released a new tool aimed at assisting audit committees objectively evaluate the performance of their auditors. Its purpose is to assist an audit committee to make an informed annual recommendation to the Board on whether the auditor should be retained. The tool has been prepared in conjunction with six other US groups representing directors, audit committees and business leaders. It contains sample questions to gauge:

The quality of services and sufficiency of resources provided by the auditor
The quality of the communication and interaction with the auditor
The auditor’s independence, objectivity and professional scepticism.

As well as sample forms for obtaining input from company personnel, the tool also encourages audit committees to find ways to communicate to shareholders that they perform an annual evaluation of the auditor and explain their process and scope of the assessment.

The CAQ has also issued a practice aid intended to encourage audit firms to proactively communicate with audit committees about audit inspection findings and any resulting quality control improvements in order to ensure the audit committees are well informed about the audit firm’s quality control programmes. The new practice aid supports the implementation of the forthcoming PCAOB Auditing Standard 16, Communications with Audit Committees which promotes more effective communication on a range of issues and is effective for public company audits of fiscal periods beginning after 15 December 2012.