The International Standard on Quality Management (ISQM) 1 has now been in place since 15 December 2022. Have you reviewed your ISQM in action and updated it for any root cause analysis carried out in the interim?
The standard requires firms to record quality objectives in six key areas. These are:
- Governance and leadership;
- Relevant ethical requirements;
- Acceptance and continuance of client relationships and specific engagements;
- Engagement performance;
- Resources; and
- Information and communication.
The first of these areas is Governance and leadership. This is of paramount importance to quality management because it drives how the firm is perceived by its Partner, staff, audit clients and ultimately the public. Governance and leadership principles serve as the framework for how the firm’s decisions are made.
The standard has enhanced requirements regarding the firm’s commitment to quality through its culture.
4 Key Areas of Quality
The requirements now also focus on 4 key areas:
- The firm’s public interest role;
- The importance of professional ethics, values and attitudes;
- The responsibility of all personnel for quality relating to the performance of engagements or activities within the Statement of Quality Management (SoQM), and their expected behaviour; and
- Quality in the context of the firm’s strategic decisions and actions (e.g. will we expand the Tax Department and offer tax planning services to our private company audit clients?), including the firm’s financial and operational priorities.
There are requirements that:
- Address leadership’s behaviour and commitment to quality, and their accountability for quality;
- Address the organizational structure of the firm and the firm’s assignment of roles, responsibilities and authority; and
- Address resource needs, and resource planning, allocation and assignment, which also include financial resources for matters like up-to-date software and training.
This brief blog is only a summary of the main requirements.
For more assistance please see our ISQM Toolkit or if you prefer to chat through the different audit risks and potential appropriate responses presented by this standard, please call or e-mail John McCarthy FCA on Governance and leadership or e-mail him at john@jmcc.ie
Other publications and AML webinar
- See our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
