Quality Management Standards Frequently Asked Questions

Quality Management Standards FAQ's

  • 1) Systems of quality management in compliance with ASQM 1 Quality Management for Firms that Perform Audits or Reviews of Financial Reports and Other Financial Information, or Other Assurance or Related Services Engagements are required to be designed and implemented by 15 December 2022, and the evaluation of the system of quality management required by paragraphs 53-54 of ASQM 1 is required to be performed within one year following 15 December 2022.

    2) ASQM 2 Engagement Quality Reviews is effective for audits and reviews of a financial report for periods beginning on or after 15 December 2022 and other assurance and related services engagements beginning on or after 15 December 2022.

    3) The revised ASA 220 Quality Management for an Audit of a Financial Report and Other Historical Financial Information is operative for financial reporting periods commencing on or after 15 December 2022.

    For our Australian stakeholders with June year ends, 1 July 2023 will be the beginning of the first year of auditing clients under the new and revised quality management standards.

  • The new and revised standards promote a robust, proactive, scalable, and effective approach to quality management. The standards place greater responsibility on firm leadership for continuously improving the quality of their engagements and remediating when deficiencies are found. Some of the key changes include:

    • Increases firm leadership responsibilities and accountability, and improves firm governance
    • A risk-based approach focused on achieving quality objectives
    • Modernises standards to address technology, networks, and the use of external service providers
    • Increases focus on the continual flow of information and appropriate communication internally and externally
    • Proactive monitoring of quality management systems and timely and effective remediation of deficiencies
    • Enhances engagement partner’s responsibility for audit engagement leadership and audit quality
    • Clarifies and strengthens requirements for a more robust engagement quality review

    When effectively implemented, the standards should help ensure that a commitment to quality is at the heart of firm strategy and operations.

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