Monitoring Audit Quality

Quality audit engagements are achieved through planning, performing and reporting in accordance with professional standards and applicable legal and regulatory requirements. BDO’s system of quality control consists of the following elements to ensure we are delivering the highest audit quality:

Inspections are an integral part of our monitoring and remediation processes:

During 2018, we inspected:

	49% of our partners

	Across all six regions

	Representing 152 engagements - 24 issuer clients 107 non-issuer clients 21 employee benefit plan audits
	Covered 78% of practice offices

	Represented approximately 5% of all Assurance hours for period ended March 31, 2018

	Reviews of functional areas conducted in 15 offices, representing all six regions

Focus on Behaviors to Drive Audit Quality

The priorities that we outlined in last year’s report have been effective at driving improvement, and we continue to conduct causal analyses to identify positive behaviors to continually reinforce and address areas for renewed emphasis and continued vigilance:

Appropriate level of audit knowledge and experience	Sufficient time allocation for project management and appropriate work sequencing and timing	Evidence appropriate review controls and control design
Appropriate level of supervision and review in alignment with perceived risk	Reliance on use of firm guidance and applicable professional standards	Appropriate focus on workload management
Appropriate exercise of professional skepticism and application of professional judgment framework	Performance of robust risk assessment and understanding of significant risk of material misstatements and flow of transactions	Adequate integration and review/supervision of information system and tax professionals
Obtaining good understanding of processes, including identifying what could go wrong and related controls	Appropriate reevaluation/challenge of certain legacy assumptions and conclusions	Emerging areas of risk – e.g., revenue recognition, going concern, taxation and tax reform, Wayfair, etc.
Appropriate partner mindset	Thorough completion of firm templates and application of required practice aids & tools