Quality Management at Firm Level - ISQM 1

Objective

The objectives of this project are:

  • Enhancing the robustness of firm’s systems of quality control through various means, including:
    • Introducing a more proactive and tailored approach to managing quality.
    • Increasing firm leadership responsibilities and accountability, and improving firm governance.
    • More rigorous monitoring of systems of quality control and more effective remediation of deficiencies.
  • Modernizing the standard for an evolving and increasingly complex environment, including addressing the impact of technology, networks, and use of external service providers.
  • Improving the scalability of the standard.

PROJECT CONTACT

TASK FORCE

Project Stages

Board Papers

September 2019 December 2019 March 2020 June 2020

Board Minutes

September 2019 December 2019

CAG Papers

September 2019 March 2020

CAG Minutes

September 2019

Summary
MEETING HIGHLIGHTS - MARCH AND APRIL 2020

March

The IAASB discussed a full draft of proposed ISQM 1. The IAASB particularly focused on the identification and assessment of quality risks, external communications, findings and deficiencies, the inspection of completed engagements, service providers, and the annual evaluation of the system of quality management. The IAASB also discussed the meaning of the effective date of proposed ISQM 1.

The IAASB broadly supported the proposals and encouraged the ISQM 1 Task Force to further simplify the identification and assessment of quality risks, clarify the definition of deficiencies, and enhance the standard to encourage communication externally. With respect to the evaluation of the system of quality management, the IAASB also suggested adopting a less binary conclusion about the system of quality management to encourage a positive approach to evaluating the system. 

April

The Board discussed revisions to a number of areas of proposed ISQM 1, including how the standard addresses public interest, the firm’s risk assessment process, the definitions of deficiencies and findings and key aspects of monitoring and remediation, information and communication, service providers, relevant ethical requirements and the evaluation of the system of quality management. The Board in general supported the proposals. The Board encouraged the ISQM 1 Task Force to continue developing the definitions of deficiencies and quality risks, and also requested the Task Force to clarify certain requirements related to the firm’s risk assessment process. In supporting the proposals to address external communications, the Board suggested that the requirement focus on the firm’s determination of when it is appropriate to communicate with external parties.

The ISQM 1 Task Force will present targeted issues in June 2020 and present a full draft of the final standard for approval at the September 2020 IAASB meeting.

 

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