Quality Control at Firm Level - ISQC 1
Initial activities in scoping the project will focus on whether there is a need to revisit specific aspects of the quality control standards to enhance clarity and consistency of their application. This may include restructuring ISQC 1, additional requirements or guidance within the standard or additional guidance in support of the standard. Specific aspects within ISQC 1 and ISA 220 being explored include, governance, engagement partner responsibilities, engagement quality control reviews, monitoring, remediation, alternative audit delivery models and specific issues pertaining to small- and medium-sized practices.
The IAASB commenced its initial information gathering on the topic of quality control in June 2014 with a Working Group being formed in October 2014. The issues identified and discussed at the IAASB meetings are part of the Invitation to Comment on Enhancing Audit Quality in the Public Interest which was issued in December 2015. The Working Group will use the comments received on the Invitation to Comment as a basis for the project proposal which is scheduled to be discussed in December 2016.**
** Together with the ISA 600-Group Audits and Professional Skepticism project, this project is part of the Audit Quality Enhancements Coordination Group (AQECG). The AQECG intends to coordinate the various inputs to the invitation to comment developed at the individual working group level, and take a holistic approach as to how the matters are presented in one invitation to comment.
MEETING HIGHLIGHTS - SEPTEMBER 2017
Quality Control at the Firm Level
The Board discussed the Quality Control Task Force’s (QCTF) recommendations on the possible revisions to ISQC 1 in relation to documentation of the system of quality management. The Board was supportive of the QCTF’s proposals and suggested various refinements.
MEETING HIGHLIGHTS - JUNE 2017
Quality Control – Firm Level
The Board discussed the Quality Control Task Force’s (QCTF) recommendations on the possible revisions to ISQC 1 that included a discussion of a working draft of ISQC 1 (Revised) and how the proposals are expected to change firm behaviors. The discussion also included the following key topics:
- How a quality management approach has been incorporated into ISQC 1.
- The overall structure of ISQC 1, including the proposed new components and how they are related.
- The extent to which the requirements in extant ISQC 1 should be retained in order that the robustness of ISQC 1 is maintained.
- The scalability of the revisions to ISQC 1 and the application of the standard by small and medium sized practices (SMPs).
- The specific proposals in relation to the components addressing:
- Governance and leadership, including organization, culture and strategy.
- Information and communication.
- The quality management process, comprising the process of establishing quality objectives, identifying and assessing quality risks and designing and implementing responses to the quality risks).
- Monitoring and remediation, which forms part of the quality management process.
The Board was supportive of the overall direction proposed by the QCTF and emphasized the importance of outreach with a variety of stakeholders to seek input on the practicality of the proposals. The Board also encouraged the QCTF to develop guidance and examples to accompany the revised standard in order to explain the implementation and application of the standard.
The Board also discussed the appropriate location of the requirements and application material in relation to engagement quality control (EQC) reviews and agreed that a separate standard addressing EQC reviews should be developed.