28 February 2021

Audit Quality Management

The final pronouncements on ISQM 1, ISQM 2 and ISA 220 were published in December 2020. From December 2022 all auditors and assurance practitioners must adhere to the new standards.

At this stage, the XRB has not yet revised PES-3 but will likely occur in the coming months. The adoption date may be some time away but implementing the requirements at a firm and engagement level will take considerable time and effort.

At Audit Assistant, we are planning and developing ways to reduce the burden of the changeover and integrate the requirements of the new standards into our systems. We will keep you updated as new information arises.

Most of our clients are involved in similar audit and assurance engagements and therefore through our network best positioned to develop a system of quality management based on our clients’ experience and expertise.

Under ISQM 1, we could potentially constitute a service provider and act as a network for our clients. We could also act as an advocate for small-medium audit and assurance practices to ensure that regulation is not onerous and favouring larger firms that have more resources.

To achieve our quality management objectives, we are proposing to do the following:

  • Create a customisable quality control manual for our clients which sets out the minimum steps to manage audit and assurance quality in the Tier 2 to Tier 4 Not-for-profit sector (the standard will be scalable and acknowledge that many of our firms are sole practitioners).
  • Partner with our clients to develop quality control steps for auditing commercial and larger entities.
  • Continue to develop a structured training system that teaches users how to use Audit Assistant correctly, including resources that teach audit principles and the fundamentals of the auditing and audit standards.
  • Through file reviews, monitor our clients’ work to ensure that our audit quality policies, procedures, and systems adequately address any quality risks.
  • Work with clients to ensure that engagement team members understand their audit quality responsibilities and inform us of any suspected deficiencies in the quality management system.
  • These processes could be incorporated as part of your quality management system.

If this proposal is of benefit to your firm it would be great to inform us of your interest. We need to know if there is sufficient interest in the endeavour to make it worthwhile.