Are Cold File Reviews Necessary?

Are Cold File Reviews Necessary?

Are cold file reviews necessary? A good question you might say.

One of the main characteristics of ISQM (Ireland) 1 (hereafter ISQM 1) (ISQM1 Updated Oct 2023) is that the standard is iterative, and so it is implemented is by carrying out audits of cold file and hot file reviews. Ideally these reviews are carried out by someone experienced and unconnected with the audit assignment so that the results are fully objective and up to date.

One objective of the reviews is to identify issues that may require amendment in the ISQM so that it is a constantly evolving document.

Per ISQM 1 requirements, the monitoring process must provide a basis for identifying deficiencies in the system of quality management such that prompt remedial action can be taken, and the deficiencies can be communicated to the audit teams without delay.

ISQM 1:38 requires the monitoring process to include the inspection of completed audits (cold file reviews). The cold file reviews must include at least one completed audit from each Responsible Individual on ‘a cyclical basis determined by the firm’.

Bear in mind that the monitoring process does not only involve carrying out cold file reviews. The system of quality management must be generally monitored to achieve the objectives of ISQM 1. These objectives are set out in the question: “What is the purpose of the monitoring and remediation element of ISQM 1?”

For more on the whole ISQM process please see our ISQM 1 Toolkit on our website here.

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