Microsoft Word Audit Quality-Framework Final vs 20140214

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59 115. It is important that standards are revised in response to feedback received about their use and implementation. However, it is important for standard-setters to be cognizant of the impact that regular revisions to standards may have on auditors’ training and implementation needs in using the standards. IFAC requires its member bodies to take actions to adopt and implement ISAs, the
Code of Ethics for Professional Accountants and the IESs in their jurisdictions, and to assist in their implementation, depending on the member bodies’ responsibilities in national environments. In some countries, the ISAs are modified to take account of, or are supplemented by additional, national requirements.
1.9.2 Bodies Responsible for External Audit Inspections Consider Relevant Attributes of Audit Quality,
Both Within Audit Firms and on Individual Audit Engagements
116. External audit inspections provide an opportunity for evaluating auditors’ compliance with auditing standards, and depending on their mandate, other aspects of audit quality. Actions taken by audit firms to address findings identified by audit inspectors can lead to improvements in audit effectiveness and, where the results of audit inspections are published, will lead to greater awareness among stakeholders about audit quality issues. Over a period of time, the findings from external audit inspections need to be analyzed and fed back to standard setters.
1.9.3 Effective Systems Exist for Investigating Allegations of Audit Failure and Taking Disciplinary Action
When Appropriate
117. Investigation and disciplinary action can be undertaken by professional accountancy organizations.
However, as is the case with audit inspection, in relation to listed companies and other public interest entities, it is increasingly being undertaken by independent audit regulators.
118. Audit failures can be difficult to define, especially as so much of an audit involves judgment, and criteria in laws and regulations are sometimes vague and difficult to enforce. The effectiveness of disciplinary activities is increased when clear criteria have been established as to what represents an audit failure.
119. Authorities also need a range of sanctions available to them, including the power to revoke the license of audit firms or individual auditors in defined circumstances. While such actions may be appropriate in extreme cases, the regulatory process is enhanced when more proportional sanctions are also available for lesser issues. These may include fines and mandatory retraining.

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