The IAASB has raised the bar for quality management.
Three new and revised standards strengthen and modernize the audit firm’s approach to quality management. Through the standards, the IAASB is addressing an evolving and increasingly complex audit ecosystem, including growing stakeholder expectations and a need for quality management systems that are proactive and adaptable.
The standards direct audit firms to improve the robustness of their monitoring and remediation, embed quality into their corporate culture and the “tone at the top”, and improve the robustness of engagement quality reviews.
The standards became effective December 15, 2022. They replaced the IAASB’s International Standard on Quality Control 1 and International Standard on Auditing 220.
- Increases firm leadership responsibilities and accountability, and improves firm governance
- A risk-based approach focused on achieving quality objectives
- Modernizes 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
The Quality Management Standards
- International Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements
- International Standard on Quality Management 2, Engagement Quality Reviews
- International Standard on Auditing 220 (Revised), Quality Management for an Audit of Financial Statements
- Conforming Amendments to ISAs and Related Materials Arising from the Quality Management Projects
- Conforming and Consequential Amendments to the IAASB’s Other Standards as a Result of the New and Revised Quality Management Standards