Time to Review the ISQM

Time to Review the ISQM

The International Standards on Quality Management (ISQM) has been effective since December 2022.

It is applicable to all audit firms and is a step-change from the requirements of the, now defunct, ISQC 1. The ISQM introduced:

  • a new risk-based quality management approach that requires audit firms to
  • design and implement a System of Quality Management (SoQM); and
  • operate that system of quality management for audits, reviews of financial statements or other assurance engagements.

Now that the standard has been in effect for just over 12 months, each firm must compulsorily carry out a documented review of their System of Quality Management to assess its effectiveness since coming into force in December 2022.

Part of this assessment before the 2024 audit season commences, will be:

  • documenting the results of hot and cold file reviews that took place during 2023;
  • analyse the root causes of these findings; and
  • extract from these issues the reasons why the more significant/most frequent findings arose;
  • decide as a firm how best to avoid repeating the same mistakes; and
  • adjust the SoQM accordingly for a more effective audit approach in 2024.

Anyone who may like to migrate to a very user friendly version of the ISQM or use it as a benchmarking tool against which to measure the effectiveness of your current ISQM, may purchase our ISQM Toolkit for €250+VAT here.

Key features:

The Toolkit comprises three parts that are downloadable in Word format, with associated instructions in pdf format.

Part 1 – Setting Objectives and Risks.

Part 2 – Risk Assessment and Responses.

Part 3 – Monitoring and Remediation including Root Cause Analysis (RCA).

The toolkit comes with three additional optional questionnaires to help with documenting an assessment of the firm’s:

  • Methodology and software providers;
  • Training providers; and
  • File review and Technical Queries consultants.

More information on the ISQM Toolkit is available here.

In addition, during 2023 we also published a very helpful IT Controls Assessment questionnaire tool for audit firms to help implement ISA 315.

IT Controls Assessment

Auditors are reminded that there are relatively significant changes in the requirements of ISA 315 Identifying and Assessing the Risks of Material Misstatement which was first applicable for accounting Periods Ended 21 December 2022 and of course Periods Ended 21 December 2023.

Auditors dealing with audits of affected entities will already have adopted new audit programmes in 2023, in additional to the normal audit tests, will also need to assess the entity’s IT controls (no matter what the size of that entity).

This is a significant new development for auditors of SMEs, in particular, and will be a game changer ion the type of audit documentation and evidence of assessment of such IT controls by the auditor on audit files.

For an easy to implement additional (two page) IT Controls Questionnaire to help document the above process, please click on this link to download immediately for only €60 + VAT.

Please also go to our website www.jmcc.ie/training to see our latest:

  • Latest updated AML for Accountants webinar (December 2023) which 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. A 20% discount is available for orders of five or more webinars/products, if bought together.
  • There are other accounting/audit webinars on the site and more will follow throughout 2024.
  • Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
  • letters of engagement and similar templates. Please 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.
  • ISQM TOOLKIT – We can also tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.