More ASIC guidance for directors on the features of an audit committee that support audit quality

The Australian Securities and Investments Commission (ASIC) recently updated Information Sheet 196 Audit quality – The role of directors and audit committees (Info Sheet 196) to include a new section, What features of an audit committee support audit quality?, which is based on the IOSCO report on good practices for audit committees in supporting audit quality (issued January 2019).

The key features outlined in Info Sheet 196 that audit committees should have to support them with audit quality are summarised in the diagram below:

Info Sheet 196 also includes sections explaining:

• Why audit quality is important
• The auditor's responsibilities
• The roles of directors and audit committees
• The directors' responsibilities for auditor independence
• Who should manage the appointment of auditors
• What matters should be considered when setting audit fees
• How directors and audit committees can promote audit quality
• Possible reporting considerations for directors.

Audit committee members should have good financial reporting knowledge

Three of the seventeen features that an audit committee should have to support them with quality are related to financial reporting knowledge, i.e.:

• At least one member should have good financial reporting knowledge (preferably the Chair)
• Committee members as a whole should have an appropriate understanding of financial reporting and audit, and
• There should be introductory and ongoing training for audit committee members on financial reporting.

How can BDO help?

BDO’s IFRS & Corporate Reporting team has specialist expertise in financial reporting, including international financial reporting standards (IFRS) and other financial reporting regulatory matters, and we can help train or provide advice to your committee on a variety of topics. Please contact us for more information.