Centre for Audit Quality expected to issue the final version on July 1
The CA Institute has now set the ball rolling on its much-anticipated Audit Quality Maturity Model (AQMM). This AQMM is basically intended to help improve the audit quality of firms and audit companies with substantial stakeholders.
This model has been developed and will be tested through a collaborative approach between the ICAI’s Centre for Audit Quality and the Peer Review Board. The objective of this evaluation matrix is for sole proprietors and audit firms to be able to self-evaluate their current level of audit maturity, identify areas where competences are good/lacking and then develop a roadmap for upgrading to a higher level of maturity.
Soon after taking over as the President of the Institute of Chartered Accountants of India (ICAI) Nihar Jambusaria had in March said the Institute will roll out an audit quality maturity model for its members to self-assess the audit quality in their firms. Jambusaria had said that they will be asked to take a self-proficiency test around quality aspects of their audit work and will be assigned the score.
AQMM will be recommendatory initially and after one year the Central Council will review the date from which it would become mandatory. Firms auditing a listed entity; banks other than cooperative banks (except multi-State cooperative banks); and insurance companies will be covered in AQMM v1.0. However, firms doing only branch audits are not covered for this exercise.
Seeking public views
The exposure draft of the AQMM version 1.0 has been shared with various stakeholders and will be available for public comments for 15 days. The Centre for Audit Quality (CAQ) will release the final AQMM version 1.0 on July 1, after incorporating the comments received from stakeholders, sources close to the development said.
A series of fraud events in Corporate India such as Nirav Modi scam in Punjab National Bank, the blowout of IL&FS, collapse of DHFL had shocked the nation and raised concerns over audit quality and the ability of statutory auditors to highlight corporate misconduct when they attest financial statements.
This has prompted the Institute to focus attention on audit quality and now introduce self-evaluation matrix for the audit firms.