Audit Committee Effectiveness, Audit Quality Indicators, Professional Skepticism, Value of the Audit Among the Topics in 2014 Research RFP
Washington, D.C. – The Center for Audit Quality (CAQ) today issued a request for proposals (RFP) to fund independent academic research on auditing-related topics. This latest RFP focuses on a number of critical policy issues that are priorities for the CAQ and the public company auditing profession, including Audit Committee Effectiveness, Audit Quality Indicators, Professional Skepticism, and the Value of the Audit.
The CAQ and the public company auditing profession are committed to supporting valuable academic research that can have significant real world impact on the future of auditing and audit quality. This marks the sixth year that the CAQ will award grants for independent, scholarly academic research on topics of interest to the profession.
In 2008, the CAQ established a Research Advisory Board (RAB), comprised of representatives from academia and the profession. In the past five years, the RAB has awarded nearly 30 grants for independent academic research projects on several topics of interest to the profession.
For 2014, the CAQ is especially interested in proposals that address one of the topics listed below. These topics, and the examples presented, are illustrative of areas that the CAQ believes will prove helpful to the profession.
Audit Committee Effectiveness
Audit committees play a critical role in the financial reporting process. The CAQ is interested in research that will add to the current understanding of the affect audit committees have on the financial reporting process and the audit.
Audit Quality Indicators (AQIs)
The CAQ recognizes that there have been a variety of research projects and global initiatives centered on the topic of audit quality, but none have yet resulted in universal agreement on a definition, audit quality framework, or the most relevant measures to assess audit quality. Views on AQIs have been quite varied and perceptions tend to differ depending on, among other factors, the degree to which various stakeholders are involved in the audit process.
The CAQ is interested in research that would provide perspectives on the firms’ audit quality (transparency) reporting at the U.S. and global level.
Professional Skepticism (PS)
Professional skepticism is a key component of audit quality. Audit firms continually seek ways to foster the proper application of skepticism in practice. Among other issues and questions, the CAQ is interested in research into what influences the ability of senior audit team members to be skeptical in the field, what would enhance the application of skepticism in the field, and what are effective ways to document the consideration of alternatives/evidence such that the audit documentation demonstrates skeptical thinking in the assessment of audit evidence?
Professional judgment is used by preparers and auditors in the application and interpretation of financial reporting standards. The CAQ is interested in academic research that can provide insights into how preparers and auditors apply professional judgment and what factors might impact the application of judgment. Some specific areas of focus include the evaluation of the reasonableness of estimates of fair values, impairments, development stage intangibles, contingent liabilities; the ability to audit complex accounting estimates; and effects of a principles-based versus a rules-based approach to accounting/auditing standards.
Value of the Audit
Another area of interest is the value ascribed to the audit (e.g., debt and equity market effects; the value proposition of audited financial information; the view of stakeholders).
Additional areas of potential research include financial reporting fraud and communications and information technology. The number of projects selected for funding will depend on the quality of proposals received and the total dollar amount of funds requested. The CAQ anticipates making available a total of up to $200,000 to fund multiple projects during this submission period.
To be considered, proposals should be received by Monday, March 3, 2014. The CAQ is implementing a new automated submission process for all proposals. Proposals will be reviewed by the CAQ’s Research Advisory Board. Grants will be announced on or about May 31, 2014. The RFP is available on the CAQ’s website.
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The Center for Audit Quality (CAQ) is an autonomous, nonpartisan public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets. The CAQ fosters high quality performance by public company auditors, convenes and collaborates with other stakeholders to advance the discussion of critical issues requiring action and intervention, and advocates policies and standards that promote public company auditors’ objectivity, effectiveness and responsiveness to dynamic market conditions. Based in Washington, D.C., the CAQ is affiliated with the American Institute of Certified Public Accountants. For more information, visit www.thecaq.org.