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29 Apr. 2019

Request for Comments on IAASB Quality Management Standards

The Australian Auditing and Assurance Standards Board (AUASB) seeks public comment by 5 June 2019 on three interrelated IAASB standards that address quality management.

The proposals bring important changes to the way professional accountancy firms are expected to manage quality—for audits, reviews, and other assurance and related services engagements.

The proposed standards include a new proactive risk-based approach to effective quality management systems within firms that establish the foundation for consistent engagement quality. The new approach improves the scalability of the standards because it promotes a system tailored to the nature and circumstances of the firm and its engagements.

The IAASB proposals are intended to improve engagement quality through:

• Modernising the standards for an evolving and increasingly complex environment, including addressing the impact of technology, networks, and use of external service providers;
• Increasing firm leadership responsibilities and accountability, and improving firm governance;
• More rigorous monitoring of quality management systems and remediating deficiencies;
• Enhancing the engagement partner’s responsibility for audit engagement leadership and audit quality; and
• Addressing the robustness of engagement quality reviews, including engagement selection, documentation, and performance.

The AUASB has issued an Explanatory Guide Exposure of the IAASB’s Proposed Quality Management Standards in Australia that provides an overview of how the AUASB is requesting feedback from Australian stakeholders on the proposed changes and their impact on the Australian assurance market.  Additionally, the AUASB has issued an Explanatory Memorandum for each proposed standard that outlines:

• specific questions on each proposed standard;
• background to AUASB identification of specific issues on each proposed standard;
• comment date; and
• proposed Australian outreach

The links to the aforementioned documents are provided below:

1. Explanatory Guide Exposure of the IAASB’s Proposed Quality Management Standards in Australia
2. ISQM 1 Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements
3. ISQM 2 Engagement Quality Reviews
4. ISA 220 Quality Management at the Engagement Level

Stay alert to the AUASB’s website for news of Outreach Plans – your views are valuable to us.  Now is the time that the AUASB can influence the direction of these quality management standards.