Improving Audit Quality through Auditor Communication

Charting Recent Progress and Looking Ahead

Cindy Fornelli

The state of audit quality is strong—and getting stronger. Annual tallies of financial restatements have dropped dramatically from post—Sarbanes-Oxley Act of 2002 peaks and have held steady at lower levels for several years, according to the Audit Analytics report “2014 Financial Statement Restatements” by Don Whalen, Olga Usvyatsky, and Dennis Tanona. At the same time, investor confidence in the U.S. capital markets, audited financial statements, and public company auditors remains robust, as indicated by the Center for Audit Quality's (CAQ) 2015 Main Street Investor Survey. Commenting on these developments, SEC Chair Mary Jo White recently stated that “the positive signs are attributable, at least in part, to improvements in audit quality and the enhanced role that auditors generally now discharge in providing an essential check in the financial reporting process” (“Maintaining High-Quality, Reliable Financial Reporting: A Shared and Weighty Responsibility,” keynote address, 2015 AICPA National Conference).