INTHEBLACK May 2022 - Magazine - Page 9
The suite of QM
standards is designed
to be scalable, enabling
practitioners to adopt
different approaches
to QM.
decisions, goals and resource management all need to
be aligned with a commitment to quality required by
the QM standards. Firms will need to draw on financial,
human and technological resources to ensure
compliance with the standards. In addition, in order to
meet the independence requirements, other business
units will need to align their engagement acceptance
with restrictions on non-assurance services provided to
audit clients and staff financial interests in those clients.
The IAASB highlights that “ISQM 1 promotes
integrating QM into the culture of the firm, the firm’s
strategy, operational activities and business processes”,
as opposed to being a discrete compliance exercise.
ALLOCATING INDIVIDUAL RESPONSIBILITIES
The importance of getting this initiative right is reflected
in the requirement for ultimate responsibility and
accountability for implementation of QM to sit with
the highest level of leadership within each firm.
Accountability is required to be clearly allocated.
Individuals are required to be assigned operational
responsibility and accountability for the overall design,
implementation and operation of the QM system,
independence, monitoring and remediation of the
system and appointment of engagement quality
reviewers. In addition, the engagement partner has
ultimate responsibility for the QM for each audit or
assurance engagement they undertake.
SCALABLE APPROACH
The suite of QM standards is designed to be scalable,
enabling practitioners to adopt different approaches to
QM. For example, many sole practitioners are likely to
focus more on risks and responses at the engagement
level. However, doing so requires professional judgement in
designing, implementing and operating the system of QM.
PLAN YOUR APPROACH
Firms need to determine the approach to implementation
that works for them. Approaches could include:
A phased approach – addressing each of the eight
components sequentially
A big bang approach – implement the entire system
at one time
A pilot approach – test the system out on one team,
office or location before rolling out to the entire firm
Whichever is chosen, monitoring of the effectiveness
of the system will need to be undertaken following
implementation.
Checklist of actions to implement QM
• Allocate responsibilities
• Determine quality objectives to address each
component of QM
• Assess risks to achieving the quality objectives
• Design responses
• Implement and monitor effectiveness
REAPING THE BENEFITS
More effective risk management is as much for the audit
firm and engagement partner’s protection as it is for the
benefit of audited entities in ensuring high-quality
audits. “Audit firms have a huge opportunity when
implementing QM to rethink their approach to audit
engagements in order to make a step change in quality,”
Jui says, reflecting on the outcome of the IAASB’s work
on developing QM.
Better identification and mitigation of risks that the
firm faces with respect to quality will result in less
unwelcome surprises. Such surprises may arise from
circumstances such as unidentified conflicts of interest,
acceptance of engagements for which the team has
insufficient industry knowledge or corner cutting due to
unreasonable deadlines, all of which are preventable.
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