Audit firms of all sizes, with differing levels of complexity will expect their service providers to publish an off the shelf manual to help implement ISQM 1, just like they did with its predecessor ISQC1. Our new ISQM TOOLKIT is here to help you with documenting your ISQM compliant audit quality risks and responses.
The new ISQM standard requires each audit firm to tailor the ISQM TOOLKIT in such a manner that the risks and responses are unique to each firm. In this regard the new ISQM TOOLKIT is very different to, its off the shelf predecessor, the ISQC1.
Each audit firm must document its:
- audit objectives (which will be unique, depending on the size of each firm and the nature, size and complexity of its client base),
- audit risks; and
- responses to those audit risks
because ISQM 1 requires that these responses are tailored to each firm’s particular circumstances. Each audit firm will need to consider the firm’s particular risks and ensure the responses are tailored appropriately, and document these with an annual review and updates in subsequent years. The process is iterative by its very nature.
The good news is that our new ISQM TOOLKIT has just been published to help audit firms implement the Action Plan below.
Action Plan
Here’s how to start.
- Write down key information about the firm and its audit engagements (e.g. do we audit any groups);
- Think about the quality objectives in the standard and
- The risks arising if those quality objectives are not met.
Then take a look at the firm’s current audit policies and procedures to identify gaps e.g. do we have up to date letters of engagement, representation, Financial Statement Disclosure Checklists or the latest audit manual for charities, insurance brokers etc.
If you find that you currently have an ISQC 1 policy or procedure that doesn’t fit any of the risks you have identified, either it isn’t needed or you have missed a risk. The answer will be unique to your firm and you will, need to decide which is the correct response. You can’t copy/past the answer from your friend down the road. It goes without saying that these blogs cannot be a substitute for reading the ISQM 1 itself.
More on documenting these risks in one of our upcoming blogs.
If you would like a bespoke consultation remotely or on-site to discuss the new ISQM 1 in more detail please send an e-mail to john@jmcc.ie
Future blogs
Over the coming weeks we will publish a series of blogs, alongside the publication of our new Audit Quality Control Manual called the ISQM TOOLKIT, to help auditors implement the new process.
Publications and AML webinar
- 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.
Tags: ISQM TOOLKIT, IAASA, International Standard on Quality Management (ISQM) 1, Root Cause Analysis, Anti Money Laundering Policies Controls & Procedures Manual, AML Training webinar.
