ISQM 1: Quality Management for Firms that Perform Audits or Reviews of Financial Statements,

ISQM 1: Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements.

ISQM 1, which became effective from 1 January 2022, provides a framework for quality management to firms that perform audits or reviews of financial statements, or other assurance or related services engagements. It is designed to help firms improve the quality of their work, comply with ethical requirements and relevant regulations, and strengthen public confidence in the profession.

The standard sets out requirements and guidance for firms to establish, implement, maintain, and continuously improve a system of quality management. It covers key elements such as leadership and governance, risk assessment and response, human resources, engagement acceptance and continuance, engagement performance, monitoring, and remediation.

Case Study 1: ABC Limited

ABC Limited is a medium-sized audit firm that provides audit and assurance services to clients in various industries. The firm has a team of experienced and qualified professionals who are committed to delivering high-quality services to their clients. However, the firm has recently experienced some quality issues in its audit engagements, including inadequate documentation, insufficient audit evidence, and failure to identify and address significant risks.

To address these issues, ABC Limited decided to implement ISQM 1 as part of its quality management system. The firm established a quality management team and assigned a quality control partner to oversee the implementation process. The team conducted a risk assessment of the firm's operations and identified areas for improvement, such as enhancing the firm's policies and procedures, improving the training and development of staff, and strengthening its monitoring and remediation processes.

As a result of its implementation efforts, ABC Limited was able to improve the quality of its audit engagements, enhance client satisfaction, and strengthen its reputation in the market.

Case Study 2: XYZ LLP

XYZ LLP is a large accounting firm that provides a wide range of services, including audit, tax, and advisory. The firm has a global presence and serves clients in various sectors, including financial services, healthcare, and manufacturing. The firm has a well-established quality management system that complies with relevant regulations and standards, including ISQM 1.

However, the firm has recently faced some challenges in maintaining its quality standards due to the COVID-19 pandemic. The firm had to adapt quickly to remote working arrangements, which posed some risks to the quality of its work. The firm also experienced some disruptions to its operations, such as delays in obtaining audit evidence and communicating with clients.

To address these challenges, XYZ LLP reviewed its quality management system and made some adjustments to ensure that it remained effective in the current environment. The firm enhanced its communication channels with clients and staff, provided additional training and support to staff, and implemented new monitoring and remediation procedures.

As a result of its efforts, XYZ LLP was able to maintain the quality of its work and meet its clients' needs despite the challenges posed by the pandemic.

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Categories: : Advanced Audit & Assurance (AAA)