Understanding the extent of internal monitoring coverage for engagement partners is essential for assessing the depth of an audit firm’s quality management processes. Let’s delve into the description, interpretation, and considerations regarding Partner Coverage.
Indicator: Partner Coverage (%) represents the percentage of engagement partners subject to internal reviews during the calendar year.
Purpose: This metric reflects the internal monitoring coverage of the firm.
How to Interpret the AQI:
Monitoring Investment: A higher percentage indicates a greater proportion of engagement partners subjected to internal quality reviews. This suggests a larger investment in monitoring, potentially increasing the likelihood of detecting shortcomings in audit quality.
Cautionary Note: While higher coverage implies a more robust monitoring system, it does not directly reflect the quality of audit engagements. The effectiveness of the internal review process should be assessed independently, as per AQI7. Read more
IRBA Code Considerations
Responsibilities for Independence and Quality: ISQM1 mandates firms to establish a system of quality management with policies and procedures ensuring compliance with professional standards, regulatory requirements, and independence provisions.
Analysing Partner Coverage provides insights into the level of investment in internal monitoring and risk detection within an audit firm.
As audit professionals, it’s imperative to ensure that internal monitoring efforts are robust and effective, facilitating the detection and mitigation of audit quality shortcomings.
If you do not yet have a System of Quality Management or you have a “manual system”, our Caseware SQM solution allows for creation of a live and true SoQM.
