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ICAS publishes guidance on auditor evaluation

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By Alice Telfer, Head of Business Policy and Public Sector, ICAS Policy Leadership

29 March 2019

Main points

  • ICAS publishes new guidance on auditor evaluation. Two separate guides explain current good practice and how to apply it proportionately to: private companies, publicly funded bodies and the not-for-profit sector.

  • Guidance identifies the principles of an effective audit and explains expectations around independence, professional scepticism and engaging non-audit services.

ICAS has published two new guides highlighting current good practice to support the evaluation of your auditor.

Each guide has been tailored to fit the circumstances of:

  • Private companies (SMEs)
  • Publicly funded, third sector and not-for-profit bodies.

A guide for audit committee members or board directors

The guide aims to help audit committee members or board directors, if no audit committee exists, but will be useful to anyone interested in the audit process.

Why it is important to evaluate your auditor

It is good business practice to ensure that goods and services are fit for purpose and offer value – this applies to audit as for any other significant purchase.

A regular evaluation of the auditor’s performance helps to ensure that you get the service needed for your organisation.

For public sector organisations which use a national framework where the auditor is appointed centrally, it is still important to actively review your auditor to enable two-way sharing of information and increase confidence in the quality of service.

All organisations should take an active role in evaluating how well the audit was performed both from a technical standpoint and from a customer service position.

What to expect from a good quality audit

The guidance clarifies what to expect from a good quality audit and how this benefits the organisation.

Key roles and responsibilities, how to approach the evaluation and how often this should be carried out are explained.

It also sets out the issues to consider when engaging non-audit services and articulates key principles of good practice to summarise what we are trying to achieve.  This is supported by a detailed checklist to guide audit committee members through the evaluation process.

Professional scepticism, critical appraisal and a questioning mind

One of the benefits of a quality audit is that the auditor can bring professional scepticism, critical appraisal and a questioning mind.  This can highlight issues in your organisation which are an opportunity or risks to be managed.

Constructive management challenge strengthens governance and reduces the opportunity for ‘group think’.  The auditor’s ability to demonstrate professional scepticism is crucial.

Approach to audit evaluation

The auditor should exercise competence and sound judgement throughout the audit process from planning and risk assessment to reporting.  Audit evaluation should be part of the audit committee’s on-going activities to monitor and assess effectiveness throughout the year, not just after the year-end.

While larger organisations may undertake a full assessment annually, it may be more appropriate for smaller entities to do this every two years, subject to an annual check-in, to identify if any triggers exist indicating the need for a full evaluation.

Audit independence

Audit independence is a key driver of quality audit.  The audit committee/equivalent is expected to take an active role to ensure the integrity, independence, objectivity and effectiveness of auditors, and be able to demonstrate this.

This includes not only the relationship auditors have with the organisation but also the arrangements within the audit firm itself to ensure they provide a professional and independent service.

Engaging non-audit services

Engaging non-audit services is under increasing scrutiny.  Every organisation should have a policy on this.  Whatever the size or type of organisation, the principle of ensuring independence is essential.

Our guides explain what this means in practice and what to look out for when deciding what other services your auditor can provide.


Find out more

A copy of the guides can be downloaded:

Private companies

Public funded, third sector and not-for-profit bodies


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