FAST FORWARD Building the Profession of Tomorrow Reinforcing the Profession’s Commitment to Quality Sue Coffey, CPA, CGMA Senior Vice President – Public Practice & Global Alliances Spring Council | May 18-20, 2014 #6

Long-standing History and Commitment to Quality and Public Protection CPA exam Standards setting Guidance, tools, training, development, resources Audit Quality Centers Quality monitoring/peer review Ethics enforcement Thought leadership

Emerging Issues Complexity in business and underlying standards Pace of change Continued audit relevance Peer review and inspection results Regulators’ scrutiny Expanding services

Near-Term and Long- Term Quality Enhancements under Consideration

2-Phased Approach to Enhance Quality Near-TermLong-Term Changes to professional standards and related implementation guidance Practice Monitoring of the Future New tools, development and resources (including Future of Learning, AQC activities, and CPEA) Amendments to the existing peer review program Regulator Engagement

Consideration of Professional Standards and Related Implementation Guidance Assess/modify quality control standards/guidance Considering greater specificity, particularly for audits of regulated industries (e.g., EBP, Gov) Considering incorporating certain AQC membership requirements/best practices into QC standards or guidance Monitor new clarified SASs and assess need for change Enhance value and relevance of auditor reporting, including going concern and other information

Development of New Tools, Training and Resources Identifying trends through peer review findings Develop timely tools and education to improve audit quality Future of Learning Developing additional tools, training and resources Competency-based curricula and related assessments Alerts and guides Audit Quality Center activities Center for Plain English Accounting (CPEA)

Near-term Changes to Peer Review under Consideration Enhance quality of peer reviewers Evaluate “new” industry engagements promptly Deepen review of high-risk industries and areas of concern Create “SWAT” team Make peer review results more informative

Principles for Practice Monitoring of the Future Increased public protection through enhanced audit effectiveness via: Earlier detection of engagement deficiencies Systems that capture and include all firms that should be subject to review Systems that capture and include all engagements that should be reviewed

Objectives of Practice Monitoring of the Future More real-time and continuous process to detect issues earlier Use of technology and people Use of data from firms’ systems Dashboard that is useful to firms and AICPA/external monitors Transparency and usefulness to regulators and public Checks and balances to include all firms and all A&A engagements

Continuous analytic evaluation Human review Intervention Periodic Inspection Oversight Facets of the Concept

Next Steps Discussion document – summer 2014 Profession’s plans and ideas Soliciting input from members and other stakeholders Practice monitoring of the future – fall 2014 Concept paper release Soliciting input from members and other stakeholders Critical partnerships State CPA societies Regulatory community Members

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2014 AICPA Spring Council Scottsdale, Arizona May 18-20, 2014