The Accounting and Corporate Regulatory Authority (ACRA) has completed a comprehensive review of its Audit Quality Indicators (AQI) Disclosure Framework, introducing several significant updates. The revised framework, which takes effect for audits with financial years ending on or after 31 March 2026, reflects evolving stakeholder needs and international developments in audit quality measurement.<\/p>\n
This technical note summarises the key changes and considerations arising from the revised framework.<\/p>\n
The AQI framework remains voluntary. It was originally launched in 2015 to enhance discussions between audit committees and auditors. Over time, its use has expanded to include regulatory bodies, government agencies, and audit firms themselves. Firms have increasingly adopted AQIs as internal monitoring tools to assess their systems of quality management.<\/p>\n
While voluntary, market expectations have effectively embedded AQI disclosure as a norm, particularly for firms auditing listed entities. This evolution reflects a broader shift towards transparency and quality-based differentiation in the audit profession.<\/p>\n
ACRA\u2019s comprehensive review, conducted in 2025, involved:<\/p>\n
Analysis of associations between engagement-level metrics and Practice Monitoring Programme (PM) inspection findings.<\/p>\n<\/li>\n
Feedback from users via surveys and focus groups.<\/p>\n<\/li>\n
Benchmarking against international frameworks and developments.<\/p>\n<\/li>\n<\/ul>\n
The review resulted in the introduction of three new indicators and one updated indicator. Six existing indicators remain unchanged.<\/p>\n
The updated framework comprises a balanced mix of firm-level and engagement-level indicators, emphasising that systemic quality controls and culture are equally important as engagement-specific metrics.<\/p>\n
Definition:<\/strong><\/p>\n Firm-level:<\/strong> Percentage of Public Interest Entity (PIE) audit engagements that have adopted at least one automated tool or technique, and percentage of total (PIE and non-PIE) engagements that have done so.<\/p>\n<\/li>\n Engagement-level:<\/strong> Qualitative description of how automated tools and techniques were incorporated into audit areas and related financial statement assertions.<\/p>\n<\/li>\n<\/ul>\n Scope:<\/strong> Rationale:<\/strong> Definition:<\/strong> Ethical behaviour.<\/p>\n<\/li>\n Resources to ensure audit quality.<\/p>\n<\/li>\n Culture of trust.<\/p>\n<\/li>\n<\/ul>\n Rationale:<\/strong> Definition:<\/strong> Audits previously performed by another public accounting entity.<\/p>\n<\/li>\n Retrospective application of a new accounting policy.<\/p>\n<\/li>\n<\/ul>\n Presentation:<\/strong> Complex judgmental areas.<\/p>\n<\/li>\n Deficiencies in management\u2019s financial reporting process.<\/p>\n<\/li>\n Deficiencies in audit procedures.<\/p>\n<\/li>\n<\/ul>\n Rationale:<\/strong> Important Considerations:<\/strong><\/p>\n Restatements are not automatically indicative of audit deficiencies. Management-driven corrections and immaterial adjustments may also result in restatements.<\/p>\n<\/li>\n The qualitative narrative is essential for proper interpretation.<\/p>\n<\/li>\n The indicator is intended as a conversation starter, not a conclusive measure of audit quality.<\/p>\n<\/li>\n<\/ul>\n Revision:<\/strong> Rationale:<\/strong> The revised framework applies to audits with financial years ending on or after 31 March 2026. Early adoption is encouraged, and firms are advised to begin collating relevant data in preparation.<\/p>\n ACRA indicate that it will issue detailed guidance within the next 12 weeks, which will include specimen formats and explanatory notes. The guidance is intended to support consistent interpretation while maintaining flexibility, as the framework remains non-prescriptive.<\/p>\n Data Collection and Systems:<\/strong> Qualitative Disclosures:<\/strong> Firm-Level Focus:<\/strong> Audit Committee Communication:<\/strong> The revised AQI framework represents a significant step towards greater transparency in audit quality measurement. By introducing indicators on technology adoption, culture, and restatements, and refining the audit hours metric, ACRA has aligned the framework with international developments and stakeholder expectations.<\/p>\n Firms are encouraged to view these indicators as tools for internal monitoring and constructive dialogue with audit committees, rather than merely compliance exercises. The voluntary nature of the framework allows firms to tailor their adoption approach while benefiting from the insights that comprehensive AQI monitoring provides.<\/p>\n This technical note is prepared for internal reference and is based on the understanding of the revised AQI Disclosure Framework as presented by ACRA. Firms should refer to the official guidance when issued for definitive requirements.<\/em><\/p>\n Source:<\/strong> ACRA engagement session, 6 March 2026<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" The Accounting and Corporate Regulatory Authority (ACRA) has completed a comprehensive review of its Audit Quality Indicators (AQI) Disclosure Framework, introducing several significant updates. The revised framework, which takes effect for audits with financial years ending on or after 31 March 2026, reflects evolving stakeholder needs and international developments in audit quality measurement. 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\nThe indicator focuses on advanced technological tools beyond basic audit documentation platforms. Qualifying tools include data analytics software, robotic process automation (RPA), optical character recognition (OCR), and artificial intelligence (AI) platforms. Basic assurance platforms used solely as documentation depositories are excluded.<\/p>\n
\nACRA\u2019s analysis indicated that engagements deploying technology tools were significantly less likely to receive unsatisfactory review outcomes. Stakeholder feedback also highlighted demand for visibility into technology adoption, which is seen as increasingly integral to audit quality.<\/p>\n2. Culture Survey<\/h4>\n
\nFirms are to disclose the results of their two most recent survey periods. The framework encourages the inclusion of survey questions covering:<\/p>\n\n
\nInternational developments, including the International Ethics Standards Board for Accountants (IESBA) project on culture and governance, underscore that sustainable audit quality is fundamentally shaped by an audit firm\u2019s culture and tone from the top. Measuring culture provides insights into whether staff perceptions of audit quality align with firm objectives.<\/p>\n3. Restatements<\/h4>\n
\nThe indicator measures the frequency of retrospective restatements of previously issued financial statements. It excludes:<\/p>\n\n
\nFirms are required to accompany the quantitative data with qualitative narratives to enable users to discern whether the restatement stems from:<\/p>\n\n
\nAudit committees have expressed support for this indicator, viewing it as a potential signal of audit quality issues or weaknesses in a firm\u2019s System of Quality Management (SOQM). Many large firms already monitor restatements internally. International regulators, such as the PCAOB, have also recognised the usefulness of restatement monitoring.<\/p>\n\n
Updated Indicator<\/h3>\n
Audit Hours<\/h4>\n
\nThe existing audit hours indicator has been updated to require presentation of hours incurred before and after the client\u2019s financial year-end.<\/p>\n
\nWith increased use of technology potentially reducing total audit hours, this refinement allows firms to demonstrate effective coordination of the audit process. It highlights the ability to identify and resolve issues earlier by adhering to audit milestones.<\/p>\nEffective Date and Implementation<\/h3>\n
Practical Implications for Accounting Firms<\/h3>\n
\nFirms should assess their current data capture capabilities, particularly for the new indicators. Technology adoption tracking, culture survey design, and restatement monitoring may require enhancements to existing systems.<\/p>\n
\nThe emphasis on qualitative narratives\u2014particularly for technology adoption and restatements\u2014requires careful consideration. Firms should develop clear frameworks for articulating the context behind quantitative data to facilitate meaningful discussions with audit committees.<\/p>\n
\nThe introduction of firm-level indicators (technology adoption, culture survey, and restatements) underscores the importance of systemic quality management. Firms should view these indicators as tools for internal monitoring and continuous improvement, not merely external reporting.<\/p>\n
\nGiven the varying levels of sophistication among audit committees, firms should be prepared to explain the indicators comprehensively. The framework provides an opportunity to shift conversations from audit fees to audit quality and to demonstrate a firm\u2019s commitment to continuous improvement.<\/p>\nConclusion<\/h3>\n