ISLAMABAD: To protect public interest in audit quality, the Audit Oversight Board (AOB) has revamped the audit quality control review framework, commonly known as QCRF, of the Institute of Chartered Accountants of Pakistan.
In the new framework, governance of the Quality Assurance Board has been strengthened, process for assigning a quality rating has been streamlined, and quality ratings have been redefined, a statement said on Friday.
AOB is the independent regulator established by the parliament in 2016 to work in public interest. Currently, there are more than 550 audit firms in Pakistan, out of which 121 have a satisfactory quality rating and 102 are registered with AOB. As directed by AOB, the new framework stands implemented with effect from June 15, 2019.
Audit quality involves public interest because investors, lenders and other stakeholders trust the auditor’s opinion that financial statements prepared by a company are giving a true and fair view. There are estimated to be more than 1,000 public interest companies, which include all listed companies and non-listed public sector companies. The new framework has been finalised by AOB after extensive consultations that commenced in July 2018.
Under the quality control review framework, reviewers from the ICAP’s quality assurance department examine the audit files and policies of the audit firm that seeks a quality rating. Based on the report by the reviewers, the ICAP’s Quality Assurance Board assigns a quality rating to the audit firm. Firms that are assigned a satisfactory rating may register with the AOB and only the registered firms are permitted to audit financial statements of public interest companies. Supervising the ICAP’s framework and work done by Quality Assurance Board is a statutory function of AOB.