Audit committees should regularly (at least annually) evaluate the external auditor in fulfilling their duty in order to make an informed recommendation to the board whether to retain the external auditor.
This assessment questionnaire is a tool audit committees can use to perform their evaluation of the external auditor.
Sample questions are organized to help audit committees related to four specific areas:
- quality of services and sufficiency of resources provided by the engagement team;
- quality of services and sufficiency of resources provided by the audit firm;
- communication and interaction with the external auditor; and
- auditor independence, objectivity, and professional skepticism.
Robust, two-way dialogue that includes constructive feedback to the external auditor may improve audit quality and enhance the relationship between the audit committee and the external auditor. The evaluation should encompass:
- an assessment of the qualifications and performance of the external auditor;
- the firm-level approach to promoting and monitoring audit quality;
- the quality and candor of the external auditor’s communications with the audit committee and the company; and
- the external auditor’s independence, objectivity, and professional skepticism.
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