Continuing our series of blogs where we last looked at the key differences between ISQM(Ireland) 1 and its predecessor the ISQC 1 establish quality objectives . This week we look at the question: ‘Is the new ISQM 1 scalable?’


According to ISQM 1:34D-3 when designing, implementing and operating a system of quality management (SoQM), each audit firm must take into account the nature and circumstances of the firm and its engagements and ensure that its approach is appropriate. In doing this, the firm shall:

  • take into consideration the scale and complexity of the firm’s activities; and
  • be able to demonstrate to the firm’s regulatory body and to the Irish Audit & Accounting Supervisory Authority, that the policies and procedures are appropriate.

Saleability example:

For firms with low complexity and flat structures, (for example smaller partnerships) objectives about, for example, the firm’s organisational structure and the assignment of roles, responsibilities and authority may not need to contain a lot of detail. Likewise, sole practitioner auditors or firms with only one or two audit staff, objectives relating to HR much are less likely to be very complex.

Another potential factor to take into account is where there are staff working on audits, who have chosen to opt out of the audit exam topic in their professional examinations, this additional risk factor may need to feature in a firm’s risk assessment. Such staff may need additional one-to-one audit training in the auditing basics, as they have not had the benefit of such a foundation to enhance their audit skills and scepticism.

Networks: There are important objectives in the ISQM 1 for firms that are involved in international Networks. Where firms are not members of networks, they don’t need to consider any of the objectives relating to network resources or requirements.

Group audits: Firms that never participate in group audits are unlikely to need objectives surrounding the cooperation with component or group auditors.

Additional objectives

The standard expects the firm’s SoQM to reflect the firm’s nature and circumstances. This means that there could be circumstances where extra objectives will be required in addition to those provided within the standard.

E.g. in a large, complex firm with multiple offices and strategies including mergers and acquisitions, it is likely that the firm may need to expand the mandatory objectives or provide more granular detail in its objectives and risk assessment. Completely new objectives may need to be added in these circumstances.

In smaller, less complex firms it is much less likely to need to expand the mandatory objectives, although additional granular detail may be useful depending on the circumstances.

In subsequent years, firms must take account of feedback from around the firm and from the RCA (Root Cause Analysis) work to mould new or amended objectives, as the entire SoQM is a continuously iterative process.

Where in doubt, external professional expert advice should be sought.

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

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