As part of the new ISQM 1 audit quality management standard, there has been much commentary about a new procedure called Root Cause Analysis or RCA.
Root cause analysis is now a compulsory requirement of audit quality control under paragraph 41 of the ISQM. It focuses on understanding the underlying cause behind the deficiencies identified on audit files and in audit quality processes to help provide valuable insights to the firm and help with remedial action.
It’s not practical to apply RCA to every deficiency. Firms will need to design a way of appropriately targeting RCA at the most appropriate reviews and findings.
The selection of deficiencies on which to focus RCA will involve taking the following factors into account:
- The quantum/frequency of the audit risk and/or whether the audit is high profile;
- The reviews it could be applied to, cold file reviews, engagement quality reviews and/or external monitoring reviews;
- The possible selection of all low scoring/graded files, in cold file reviews; and
- Whether the findings in question are recurring themes.
Please go to our website to 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 contact John McCarthy FCA by e-mail at firstname.lastname@example.org.
We typically tailor training and brainstorming sessions to suit your firm’s unique requirements.
Publications and AML webinars:
- 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.