The implementation deadline for the International Standard on Quality Management 1 (ISQM 1) was 15 December 2022 the date from which audit firms have their System of Quality Management (SoQM) documented and prepared.
As part of the implementation process audit firms are expected to record risks to audit quality, put in place appropriate responses and document the overall firm approach. This may best be done as a brainstorming session with senior audit personnel.
In certain cases it will be appropriate to involve non-audit Partners in the process, in so far as they provide non-audit services to audit clients, so that there is a complete understanding of the scope of the potential audit quality risks that may be present.
Essentially there are at least four steps involved:
- Work out the firm’s audit quality risks;
- Prioritise the risks depending on likelihood and impact;
- Agree the responses – take note that there are at least 18 pre-set responses in ISQM.34 that must be compulsorily dealt with or marked as ‘not applicable’ and then each firm may need to add their own specific risks.
Depending on the type and size of audit firm, there are likely to be a few risks that may be easily excluded e.g. if:
- Your firm is not part of an international network;
- It does not carry out groups audits as the Parent company auditor; and
- It does not act for Public Interest Entities).
- Devise tailored responses to the risks identified, ensuring these responses are effective and complete.
Spot check reviews by the professional bodies, on ISQM implementation, have already commenced, so the need to finalise these responses is urgent.
For those of you still in the process of ISQM1 implementation, 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 firstname.lastname@example.org.
We typically tailor training and brainstorming sessions to suit your firm’s unique requirements.
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.