Mission of the CAQ: enhance audit quality; Investors view auditors as allies, but expect them to find fraud. We're hearing that and lots more in our 'listening tour' on how to improve financial reporting.

• Author: Fornelli, Cindy
• Position: FINANCIAL OVERSIGHT

PROTECTING THE INTEGRITY of the capital markets is critical to our nation's economic well-being. Public company auditors have a central role in that effort, and the profession has taken its responsibilities to heart, in part through the creation of the Center for Audit Quality (CAQ).

The CAQ began operation in January 2007 as a member-based public policy organization. Its founding marks the first time public company auditors, as a group, have actively engaged with a variety of stakeholders--investors, issuers, regulators, and educators--and embarked on an ambitious effort: to bolster public confidence in the audit process and to aid investors and the markets by advancing constructive suggestions for change rooted in the profession's core values of integrity, objectivity, honesty, and trust.

Our governing board is comprised of leaders from the public company auditing firms and the American Institute of Certified Public Accountants, as well as public board members who bring an outside perspective to the CAQ's agenda and activities.

Working through the CAQ, public company auditors have brought an essential perspective to the dialogue surrounding the many issues facing investors and the capital markets. By listening to those with the most at stake in quality audits and credible financial reporting, the CAQ is working to facilitate productive discussion and develop viable solutions to marketplace challenges. The ongoing effort has produced some interesting insights on the current state of financial reporting.

An earful from audit committee members

Earlier this year, the CAQ commissioned a first-of-its-kind survey of audit committee members. Their views are critical because of the essential role they play in overseeing the production of corporate financial statements and the work of public company auditors. More than 250 audit committee members offered their views on the quality of corporate financial statements, the impact of the Sarbanes-Oxley Act (SOX), and the risk of fraud.

The results were encouraging, but they also highlighted some issues that need to be addressed.

The survey found that 82 percent of audit committee members believe the overall quality of audits of publicly traded companies has improved at least somewhat, if not significantly, in recent years. Further, two-thirds of the audit committee members are of the opinion that investors should have more confidence in markets today than prior to the enactment of SOX.

In addition...