Are You Ready For The ISQM?
There are several new acronyms for auditors in Ireland to grapple with before Christmas. From 15 December 2022 the International Standard on Quality Management (ISQM) 1, issued by the Irish Audit & Accounting Supervisory Authority, comes into force. The ISQM TOOLKIT is available here to purchase now for immediate download.
It is and deals with the quality management of audits with special emphasis on:
- designing,
- implementing and
- operating
a system of quality management (SOQM) for audits or reviews of financial statements or other assurance or related services engagements.
It will have a deep and lasting impact on all audits carried out in Ireland, whether they are of public or private companies. Early preparation, well before 15 December 2022, is highly recommended.
The new standard requires audit firms to be much more proactive than the predecessor document the International Standard on Quality (ISQC) 1, which was more reactive in nature.
Among the changes in terminology and acronyms, the main ones are:
- IUR = Individual assigned with ultimate responsibility for implementation assigned ultimate responsibility and accountability for the system of quality management, on behalf of the firm, evaluates the system of quality management and concludes whether the system of quality management provides the firm with reasonable assurance that the objectives of the system are being achieved.
- IOR = Individual assigned with overall responsibility for the audit engagement – usually the engagement partner.
- SOQM = Systems of Quality Management is the overall description for the eight main areas prescribed by the standard.
- RCA = Root Cause Analysis – identification of the root causes of audit deficiencies which is an iterative and non-linear evaluation. It is part of the monitoring and remediation process – see below.
- EP = engagement partner.
- KAP = for an audit of financial statements, the engagement partner is the key audit partner.
The standard is broken into eight main areas:
- The firm’s risk assessment process;
- Governance and leadership;
- Relevant ethical requirements;
- Acceptance and continuance of client relationships and specific engagements;
- Engagement performance;
- Resources;
- Information and communication; and
- The monitoring and remediation process.
The IAASB in New York (from where the standard emanates) have issued a very useful Factsheet that explains the background to the changes.
Over the coming weeks we will publish a series of blogs, in advance of the publication of our new Audit Quality Control Manual called the ISQM Toolkit, to help auditors implement the new process. The Manual will be published soon. Watch this space!
Publications and AML webinar
- The ISQM TOOLKIT is available here to purchase now for immediate download.
- 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.
