Microsoft Word Audit Quality-Framework Final vs 20140214
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| Appendix 2 42 1.2. Values, Ethics and Attitudes – Firm Level 17. Key attributes are: Governance arrangements are in place that establish the appropriate “tone at the top”, and which aim to safeguard the firm’s independence. Necessary personal characteristics are promoted through appraisal and reward systems supporting audit quality. Financial considerations do not drive actions and decisions that impair audit quality. The firm emphasizes the importance of providing partners and staff with continuing professional development opportunities and access to high-quality technical support. The firm promotes a culture of consultation on difficult issues. Robust systems exist for making client acceptance and continuance decisions. 1.2.1 Governance Arrangements are in Place that Establish the Appropriate “Tone at the Top”, and which Aim to Safeguard the Firm’s Independence 18. It is important that an audit firm has robust internal governance arrangements to safeguard the public interest nature of the audit function and to avoid the firm’s commercial interests adversely affecting audit quality, for example, by inappropriately promoting other practice areas (such as tax, corporate finance and consultancy) to the detriment of audit quality. 19. The firm’s leadership has a vital role in promoting a culture that stresses the role of the audit in the public interest and the importance of audit quality in this regard, including avoiding situations that might compromise the firm’s objectivity or independence. Communicating on a regular basis expected behaviors creates an appropriate environment within the audit firm that includes encouraging adherence to the principles underlying ethics requirements that apply to auditors. 20. Sole practitioners have direct control over their firm’s culture, and in Small- and Medium-Practices (SMPs) a small number of partners can have a very direct influence over input factors such as governance arrangements, consultation, and monitoring activities. Depending on the tone, this could be either a strength or a weakness of the small firm environment. 1.2.2 Necessary Personal Characteristics are Promoted through Appraisal and Reward Systems Supporting Audit Quality 21. Appraisal and reward systems can nurture and develop appropriate personal characteristics and behavior, including integrity, objectivity, professional competence and due care. This involves embedding these characteristics in recruitment selection criteria, advancement and remuneration processes, and training programs, using appropriate competence frameworks. 22. Competence frameworks might best be developed by reference to the competence areas of the IESs, which would promote harmonization of the frameworks among audit firms. 23. On a regular basis the firm assesses its partners and staff against the competences developed to support audit quality. In doing this, audit firms ensure that partners and staff will not be penalized for taking a robust position on audit issues, even if this may jeopardize a client relationship. |