Frequently Asked Questions
What is the CAQ?
Why was the CAQ established?
What is public company auditing?
Who are the CAQ's members?
How can my firm become a member of the CAQ?
Who leads the CAQ?
What public policy issues has the CAQ addressed?
What is the CAQ’s anti-fraud initiative?
How does the CAQ interact with public policymakers?
How does the CAQ interact with other capital market stakeholders?
What are the CAQ’s publications?
What kind of research has the CAQ commissioned?
Where is the CAQ located?
I'm a member and have a question. Where can I turn for assistance?
How can I contact a member of the CAQ's staff?
How can I receive regular informational updates from the CAQ?
Is someone from the CAQ available to speak at an event or to my organization?
The Center for Audit Quality (CAQ) is an autonomous public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets by:
- Fostering high quality performance by public company auditors;
- Convening and collaborating with other stakeholders to advance the discussion of critical issues requiring action and intervention; and
- Advocating policies and standards that promote public company auditors’ objectivity, effectiveness and responsiveness to dynamic market conditions.
Based in Washington, DC, and representing a membership of almost 600 public company auditing firms, the CAQ works to:
- Bring together investors, government officials, business leaders and academics to engage in a far-ranging discussion about the future of the capital markets and the best ways to maintain and improve audit quality;
- Conduct research to evaluate the perceptions of market participants on a variety of timely issues and to use that research data to recommends enhancements to the auditing process that may serve to advance investor confidence and the vitality of capital markets;
- Assist our member public company audit firms in their pursuit of audit quality by providing technical alerts, white papers and webcasts on key issues and topics; and
Founded in 2007, the CAQ is a self-supporting nonprofit organization that is entirely funded by member dues and is affiliated with the American Institute of CPAs.
The CAQ was established during a period of unprecedented changes to the capital markets and the public company auditing profession that began with the passage of the landmark Sarbanes-Oxley Act of 2002 (SOX). The operating environment created by the implementation of SOX has included the creation of the Public Company Accounting Oversight Board (PCAOB), a regulatory oversight body overseeing the profession; the adoption of strict rules aimed at bolstering auditor independence; and the implementation of major cultural adjustments at the firms that conduct audits for publicly traded companies.
This process of change helped convince the public company auditing profession of the need to unite as a group for the first time in order to forge greater consensus on how best to bolster investor confidence and enhance the strength and stability of the capital markets. This led to the establishment of the CAQ, which helps to lead the dialogue among stakeholders on critical issues facing the markets.
This undertaking is vital, because the ways in which public companies report, and auditors audit, financial information matters greatly to almost everyone. In the end, reliable financial information is the bedrock of investor confidence in our capital markets.
What is public company auditing?
Public companies are required by federal law to regularly file a number of public financial reports to inform investors and policymakers about business performance. Public companies’ annual financial statements are audited each year by independent auditors who examine the data for conformity with U.S. Generally Accepted Accounting Principles (GAAP). The auditors conduct a systematic examination of a company’s accounting books, transaction records and other relevant documents to consider whether the financial statements are fairly presented and free from material misstatements. The auditor prepares a written report containing an opinion on the financial statements. That opinion is filed with the U.S. Securities and Exchange Commission (SEC) and is available to investors and other interested parties.
In addition to auditing financial statements, auditors often also assess the effectiveness of a company’s internal controls over financial reporting. Internal controls are procedures designed by the company’s management to address the risk of material errors and misstatements in financial statements. Auditor attestation that the controls are effective can boost investor confidence.
Membership in the CAQ is open to U.S. accounting firms registered with the PCAOB. Associate membership is available for U.S. accounting firms not registered with the PCAOB. We also offer international firm subscriptions.
How can my firm become a member of the CAQ?
Visit our Membership page for more information about the benefits of CAQ membership and how to join..
The CAQ is led by Executive Director Cindy Fornelli. In 2011, Fornelli was honored for the third time by Directorship magazine as one of the 100 most influential people on corporate governance and in the boardroom, and Accounting Today named her one of the 100 most influential people in accounting for the fifth consecutive year. Prior to becoming the Center’s Executive Director, Fornelli was the Regulatory and Conflicts Management Executive at Bank of America. Before joining Bank of America, Fornelli was Deputy Director of the Division of Investment Management of the U.S. Securities and Exchange Commission.
The CAQ receives strategic guidance from a 12-person Governing Board that includes three members from outside the public company auditing profession. The Governing Board is led by Chair Robert E. Moritz, Chairman and Senior Partner, PricewaterhouseCoopers LLP. The CAQ Governing Board Co-Vice Chairs are Charles S. Allen, CEO of Crowe Horwath LLP, and Harvey J. Goldschmid, Dwight Professor of Law at Columbia University and former SEC Commissioner.
The three public board members, who provide an outside perspective to the CAQ’s agenda and activities, are Harvey Goldschmid; Michele Hooper, President and CEO, The Directors’ Council; and Lynn Paine, Professor of Business Administration and Senior Associate Dean, Director of Faculty Development, Harvard Business School.
What public policy issues has the CAQ addressed?
Since our formation in 2007, we have engaged stakeholders on issues impacting the capital markets. These efforts have included fair value accounting, financial statement fraud detection and deterrence, the importance of an independent accounting standard-setting process, and international financial reporting standards.
The CAQ also has worked closely with two high-level federal panels: the Treasury Department’s Advisory Committee on the Auditing Profession and the SEC’s Advisory Committee on Improvements to Financial Reporting.
In 2007 and 2008, the CAQ held a Public Dialogue Tour, bringing together investors, issuers, regulators, government officials and academics in 10 locations to discuss potential improvements to the quality, relevance and integrity of financial reporting.
What is the CAQ’s anti-fraud initiative?
Financial reporting fraud is an ongoing concern for investors and other capital market stakeholders. While there is no silver bullet solution for eliminating fraud, the CAQ’s Anti-Fraud Initiative endeavors to increase collaboration and communication among members of the “financial reporting supply chain” to help advance efforts to lessen fraud risk.
In 2009, the CAQ held a series of roundtable discussions, hosted by CAQ Governing Board Co-Vice Chair Michele Hooper and Executive Director Cindy Fornelli, on the topic of deterring and detecting financial reporting fraud. The series brought together a wide variety of perspectives with the goal of identifying best practices in the detection and deterrence of financial statement fraud.
Discussion participants throughout the series of events, held in the United States and the United Kingdom, represented a wide range of market stakeholders with a role or interest in deterrence and detection of fraud. Participants included company executives (CEOs, CFOs, CAOs and generals counsel), audit committee chairs and members, internal auditors, current and former senior regulatory officials, investors and analysts, external audit partners, forensic auditors, former fraudsters, law enforcement, academics, and members of the financial media.
The discussion series, and a follow-up series of in-depth interviews to obtain detailed perspectives on themes identified during the discussions, informed Deterring and Detecting Financial Reporting Fraud—A Platform for Action, a report released by the CAQ in October 2010.
In conjunction with the release of its report, the CAQ announced that it formed a collaborative partnership with three organizations representing participants in the financial reporting supply chain: Financial Executives International (FEI), the preeminent association for CFOs and other financial executives; The Institute of Internal Auditors (The IIA), the internal audit profession’s global voice; and the National Association of Corporate Directors (NACD), which is dedicated to advancing exemplary board leadership.
This partnership is designed to leverage the expertise and resources of our four organizations to share ideas, sponsor research and develop new tools and methodologies that are likely to be disseminated widely through white papers, webcasts and conferences. The collaborative effort will be transparent and we welcome participation and input from other stakeholders, including investors, academics and regulatory and oversight bodies.
Initial work will focus on four broad areas:
- Advancing the understanding of the conditions that contribute to fraud to better understand the pre-conditions and indicators of financial reporting fraud;
- Promoting enhanced skepticism that helps to overcome a natural inclination to trust man-agement and others involved in financial re¬porting without creating a hostile environment;
- Moderating the risks inherent in focusing only on short-term results; and
- Exploring the role of information technology, which can be both an inhibitor and a facilitator of financial statement fraud.
How does the CAQ interact with public policymakers?
The CAQ is an autonomous, nonpartisan, nonprofit organization that serves investors, public company auditors and the markets. As such, we engage in educational outreach to Congressional and regulatory officials on behalf of the profession. As deemed necessary—based on the legal disclosure standard required for those who spend time educating public policymakers and engaging in related activities—the CAQ complies with those disclosure requirements mandated under the law.
How does the CAQ interact with other capital market stakeholders?
The CAQ has a robust infrastructure to support its mission of facilitating dialogue among capital market participants and is a recognized and respected entity in public company auditing issues. Our outreach efforts with important investor, business, academic and public policy stakeholders have greatly assisted our ability to effectively partner with relevant stakeholders to advance the public discussion of issues of importance to the audit profession.
The CAQ has partnered with investor groups, including the Council of Institutional Investors (CII), CFA Institute, Investment Adviser Association and Consumer Federation of America, in support of fair value accounting and a host of financial and regulatory policy issues important to the profession. The CAQ has also joined with CII, the Investment Company Institute and the U.S. Chamber of Commerce in support of accounting standard-setting independence.
The CAQ has also hosted meetings with officials of the Financial Accounting Foundation, the International Corporate Governance Network, the NACD, the Business Roundtable, the Chamber of Commerce and the Financial Services Forum. In addition, Cindy Fornelli has served on the NACD’s 2010 Blue Ribbon Commission on the Audit Committee and its 2009 Blue Ribbon Commission on Risk Governance and has been a featured speaker at events hosted by CII, the Outstanding Directors Exchange, the New York Stock Exchange, FEI and the World Congress of Accountants, among others.
What are the CAQ’s publications?
The CAQ’s publication help inform public company auditors, investors, audit committee members and other stakeholders about critical auditing and capital markets issues. All of the CAQ’s publications are available free of charge in the Publications section of the CAQ’s website.
Deterring and Detecting Financial Reporting Fraud – A Platform for Action
Deterring and Detecting Financial Reporting Fraud was informed by a series of roundtable discussions and in-depth interviews on the issue of financial reporting fraud at public companies. The report marks the beginning of a long-term collaboration with FEI, NACD and The IIA, as well as other interested parties, to leverage existing resources and facilitate the development of tools and information to enhance efforts to mitigate the risk of financial statement fraud.
Guide to Public Company Auditing
The Guide to Public Company Auditing illustrates for capital market stakeholders the vital role public company auditors play in providing transparency in the markets. The publication serves as an introduction to, and overview of, the key processes, participants and issues related to public company auditing. Presented in a straightforward, easy-to-use format, the Guide to Public Company Auditing demonstrates to investors the important role public company auditing plays in preserving the strength and stability of U.S. capital markets.
Guide to International Financial Reporting Standards (IFRS)
The Guide to IFRS is an overview of the issue of global accounting standards to provide investors, policymakers and other capital market stakeholders an accessible and objective introduction to the current debate over a single set of high quality global accounting standards. In the spirit of educating stakeholders, the CAQ developed the Guide to help facilitate an informed discussion among interested parties.
The Year in Review is the CAQ’s annual publication highlighting our public policy, research, professional practice and member relations, and communications and stakeholder outreach activities. The 2010 Year in Review documents the CAQ’s anti-fraud initiative, highlighted by two important undertakings: the release of a report entitled Deterring and Detecting Financial Reporting Fraud: A Platform for Action; and the formation of a collaborative partnership with other prominent organizations to advance the anti-fraud effort. Additional highlights include the release of our annual Main Street Investor Survey, the funding of independent academic research on audit-related topics, the second annual Auditing Research Symposium bringing together leading academics and senior audit partners, and webcasts featuring SEC and PCAOB staff perspectives on issues important to smaller public companies and their auditors.
The CAQ Monthly Newsletter, distributed to more than 4,300 audit professionals, journalists and other capital markets stakeholders, recaps events and issues affecting the public company auditing profession. To sign up for the CAQ Monthly Newsletter, insert your email address in the box in the upper right hand corner of our home page that reads “Sign Up For Email Updates” and click “Submit.”
What kind of research has the CAQ commissioned?
Since its inception in 2007, the CAQ has annually measured individual investor confidence in the capital markets, publicly-traded companies and audited financial information. The results of the CAQ's 4th Annual Main Street Investor Survey found that despite fluctuating markets over the past year, individual investors remain confident in investing in U.S. companies that are publicly traded and in audited financial information. For the third year in a row, 75 percent of respondents in the individual investor survey said they have confidence investing in U.S. public companies. Similarly, investor confidence in audited financial information released by public companies remains strong at 70 percent, unchanged from 2009. Investor confidence in capital markets in 2010 declined somewhat, with confidence in U.S. capital markets dropping from 73 percent in 2009 to 68 percent. Confidence in capital markets outside the United States continued a decline that began in 2008, falling 10 percentage points to 47 percent.
In 2008, the CAQ conducted a survey of audit committee members, key players in the fight against corporate fraud who oversee the work of public company auditors for corporate boards. More than three-quarters of audit committee members rated overall audit quality “very good” or “excellent,” and 82 percent said it had improved in recent years. Nearly two-thirds agreed that investors should have more confidence in the markets as a result of the Sarbanes-Oxley Act.
In addition, the CAQ’s Research Advisory Board (RAB) has provided funding for independent academic research projects on auditing-related topics. In 2009 and 2010, the RAB funded a total of eight academic research projects. In December 2010, the RAB again issued a proposal to fund independent academic research on projects of interest to the auditing profession, including fraud deterrence and detection, professional skepticism, audit quality, professional judgment, the value of the audit, and the impact of communication and information technologies on the audit.
The Center for Audit Quality is headquartered in Washington, DC, with an office in New York, NY. Our Washington headquarters are located at 1155 F Street NW, Suite 450, Washington, D.C. 20004. The New York office, which houses the CAQ’s Professional Practice and Member Relations staff, is located at 1211 Avenue of the Americas, 19th Floor, New York, NY 10036.
I'm a member and have a question. Where can I turn for assistance?
The CAQ’s member relations staff stands ready to help. Call 1-888-817-3277 or, if you’d prefer, send an email to membership@thecaq.org.
How can I contact a member of the CAQ's staff?
You can view the staff directory, which includes contact information.
How can I receive regular informational updates from the CAQ?
Insert your email address in the box in the upper right hand corner of our home page that reads “Sign Up For Email Updates” and click “Submit.”
The CAQ also has a Twitter feed, where we share news and views on public company auditing and related public policy issues. We invite you to follow the CAQ on Twitter.
Is someone from the CAQ available to speak at an event or to my organization?
The CAQ has a Speakers Bureau. To inquire about the availability of one of our experts to participate in your event, contact Jake Leon, our deputy director of communications, at 202-609-8048 or jleon@thecaq.org.
