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Quality Management for Firms and Engagements

About the project

 

The International Auditing and Assurance Standards Board (IAASB) seeks public comment by July 1, 2019 on three interrelated standards that address quality management, Proposed ISQM 1 Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements (previously ISQC 1), Proposed ISQM 2, Engagement Quality Reviews and Proposed ISA 220 (Revised) Quality Management for an Audit of Financial Statements. The IAASB has also issued an Overall Explanatory Memorandum, The IAASB’s Exposure Drafts for Quality Management at the Firm and Engagement Level, Including Engagement Quality Reviews to explain the significant issues common to the three exposure drafts. It also gives details about the proposed effective dates and implementation periods. All the three exposure drafts and the Overall Explanatory Memorandum (EDs) have been posted on the Institute's website.

 

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:

  • Modernizing 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.

 

Given the significance of the changes and the need for firms to adjust how they manage quality, the IAASB has also developed the following materials to help firms understand the proposals, including how to apply them in different circumstances.

 

During 23 to 24 May 2019, HKICPA and IAASB have jointly coordinated the following events to obtain views of our stakeholders in Hong Kong on these important EDs on quality management.

 

 

Month /Year           Event Meeting summary/Webcast
23 May 2019            Roundtable discussion on EDs: Big 4, smaller firms with international network        [To be updated]
24 May 2019          Roundtable discussion on EDs: SMPs local [To be updated]
24 May 2019    Lunch Forum on EDs: Open to public/members           

For members and non-members:
Please click here

 

For members only: 
Please enroll the CPD event here

[To be updated]

 

 

Here are the photos taken during the events.

 

Our views

 

Date Topics 
16 May 2016              IAASB Invitation to Comment, Enhancing Audit Quality in the Public Interest: A Focus on Professional Skepticism, Quality Control and Group Audits

 

 

Last updated: 10 June 2019

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