Audit quality is challenging for audit committees to measure and evaluate. Audit Quality Indicators (AQIs) respond to this issue by providing quantitative measures of particular aspects of the external audit. AQIs are a useful tool that can offer insights and facilitate collaboration among auditors, management and the audit committee while providing more in-depth information to assist
in evaluating and achieving sustained audit quality.
Audit Quality Indicators (AQIs) are quantitative measures about the external audit process. When assessed alongside relevant qualitative information, they provide insights about factors that may influence audit quality. Common AQIs include:
• Timing of audit execution
• Use of specialists
• Partner/manager leverage
• Experience of engagement team
• Management deliverables
• Audit hours by areas of significant risk
For a list of other commonly used AQIs, please see the
The use of AQIs is gaining traction amongst Canadian audit committees. In 2016, CPAB launched an exploratory AQI Pilot project with Canadian audit committees, their management and external auditors to get feedback about the usefulness of AQIs and to support broader national and international discussions. Over two years, we had over 18 participants of varying sizes. Based on the results of the Pilot, CPAB believes that AQIs have significant potential to positively impact audit quality.
Learn more about who participated and the results of the Pilot in our
Final Report on CPAB’s AQI Pilot.
Other jurisdictions have also been exploring the use AQIs, including the US. To learn more about the use of AQIs in other jurisdictions, see the Appendix to the
Audit quality is challenging for audit committees to measure and evaluate. AQIs respond to this issue by providing quantitative measures of particular aspects of the external audit. AQIs are a useful tool that, with proper context and discussion among all stakeholders, can provide insights and facilitate collaboration among auditors, management and the audit committee and provide more in-depth information to assist in evaluating and achieving sustained audit quality.AQIs can be used for a number of purposes. Some common objectives include improving general oversight of the audit, increasing the transparency of the audit approach, and providing better information for the purposes of evaluating the external auditor.To use AQIs, the audit committee, management and the audit firm need to collectively determine the AQIs that they want to track and then monitor those AQIs throughout each audit cycle.Additional information about how to implement AQIs can be found in the
CPAB worked with a number of Canadian public company audit committees to pilot test the use of AQIs. Their real life experience identified the following benefits of using AQIs:
Join CPAB’s AQI Network CPAB’s AQI Network supports current and future AQI users by providing resources, sharing key insights, and enabling peer-to-peer discussion. Members of the Network also have access to in-person support. To join our AQI Network or to learn more, please contact
Consult the AQI Guide Together with CPA Canada and the Institute of Corporate Directors, we developed a short guide to assist audit committees in implementing AQIs for the first time. The Guide provides a useful step-by-step process to help audit committees and management identify relevant AQIs and establishes a general understanding of how they can be used to spark a discussion both internally and with the external auditor about improving audit quality.
Those interested in using AQIs to assist with auditor evaluation can use the Guide in conjunction with the updated Enhancing Audit Quality (EAQ) publications:
(1) Oversight of the External Auditor – Guidance for Audit Committees,
(2) Annual Assessment of the External Auditor – Tool for Audit Committees,
(3) Periodic Comprehensive Review of the External Auditor – Tool for Audit Committees.
AQINetwork@cpab-ccrc.ca with your AQI-related comments or questions.
Audit Quality Indicators - Final Report.