The summary, 2020 Conversations with Audit Committee Chairs, contains the thoughts of 300 audit committee chairs. Most of them praised their auditor’s efforts at communications with the client, sharing that they were “thorough, timely, and at the right level of detail.”
Several chairs also liked the dashboards their auditors provided for tracking the real-time progress of their audit.
Auditors also received high marks for the assignment of resources with expertise on complex accounting issues, consultation with national offices as appropriate, their practical approaches to problem-solving and their maintenance of continuity on audit teams.
Areas for improvement included helping more junior audit team members learn the client’s business, communications about auditor independence, guidance around auditing of certain controls for third-party vendors, “over-auditing” and “over-documentation,” and lack of visibility into and discussion around fee changes. Some chairs indicated audit partner rotation also needs attention.
According to the survey, emerging technologies presented some challenges. Respondents said the technological capabilities of the client and the audit firm need to be at a similar level for technology benefits to be fully realized. Cybersecurity was another concern, especially with the pandemic’s shift to remote work. Audit firm implementations of internal controls over their technology was also concerning to some.
Audit chairs cautioned against auditors becoming overly reliant on new technologies, which could lead to “less attention to or emphasis on preparer and auditor judgment, experience, or professional skepticism,” the PCAOB said.
Recently adopted technologies also gave rise to the fear of unknowns. Audit chairs noted that “while the benefits of emerging technologies are often immediately clear, the risks involved can take longer to become apparent or understood.”
Audit chairs indicated they were pleased with how auditors navigated compliance with new accounting standards, such as revenue recognition and lease accounting, in 2020.