Six of the eight components have mandatory quality objectives established in the International Standard on Quality Management (ISQM) 1 (see paragraphs 25-34 of ISQM 1). For assistance with implementing the ISQM see our ISQM TOOLKIT available for immediate download here. There is 20% off for simultaneous purchases of five items or more.
There are no mandatory objectives for the two remaining areas:
- risk assessment or
- monitoring and remediation.
Smaller firms may find that the quality objectives already included in ISQM 1 are sufficient for their needs, but some firms may need to establish other objectives or sub-objectives. Every firm must consider (and evidence they considered) whether they need additional objectives – it’s not safe just to assume you don’t need them.
Note that if a quality objective included in ISQM 1 is not relevant to your firm then you can ignore it.
The next step is to identify quality risks that threaten the achievement of those quality objectives:
- Consider
- the nature and circumstances;
- the conditions and events;
- the actions and inactions; and
- the type and nature of the client engagements.
- Much of a firm’s nature and circumstances is dictated by:
- the people working there;
- the environment within which it operates; and
- the types of client it serves.
All of the above variables may have an impact on the quality risks that are most relevant to the firm, and each firm will need to assess the significance/likelihood of those risks crystallising.
The emphasis will need to be on identifying quality risks rather than focusing on the consequences of a risk crystallising – e.g.
- not understanding the requirements of the Ethical Standard is a quality risk;
- rather than a breach of the Ethical Standard which would be a consequence of that quality risk
Watch out that where you identify a quality risk that doesn’t result from a quality objective in ISQM 1 then you will need to establish a new quality objective.
Next week we will look at assessing risks.
It’s impossible to cover everything in this brief blog. For more assistance please see our new ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please call or e-mail John McCarthy FCA or e-mail him at john@jmcc.ie
Publications and AML webinar
- The ISQM TOOLKIT 2022 is available to purchase here.
- See our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- Also we have an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
- 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.
