QUALITY MANAGEMENT Flashcards
(22 cards)
ISQM 1 - QUALITY MANAGEMENT AT FIRM LEVEL
FOCUSES ON RISK BASED THINKING, THE FIRM SHOULD IDENTIFY AND RESPOND TO RISKS TO AUDIT QUALITY
- GOVERNANCE AND LEADERSHIP
The firm must set goals for quality that make sure the directors are creating the right culture - one that values ethics, quality work and doing things the right way.
- FIRMS RISK ASSESSMENT PROCESS
Figure out what could go wrong in the firm that might lead to poor-quality audits, and then take action to stop those things from happening
- RESOURCES
The firm must set goals to make sure it gets the right resources (like people, tools, time, and money), keeps them up to date, and uses them properly — at the right time — so that the quality system works well.
- INFORMATION AND COMMUNICATION
Make sure you collect and use the right information about how your quality system is working, and share that information—both inside the firm and, when needed, with others outside—quickly enough so everyone can build, run, and improve the system effectively.
- RELEVANT ETHICAL REQUIREMENTS
The firm must set goals that ensure everyone follows ethical rules, including staying independent when performing audits
- ACCEPTANCE AND CONTINUANCE
The firm must set goals to make sure it only takes on clients and engagements that meet certain quality standards. This includes deciding if it should continue working with existing clients
- ENGAGEMENT PERFORMANCE
Set goals to make sure every audit or assurance job is done properly—following the right steps, with the right people, proper checks, and clear documentation—so you end up with a high‑quality engagement
- MONITORING AND REMEDIATION PROCESS
When monitoring shows something’s not working, you fix it right away and put measures in place so it doesn’t happen again
ISQM 2 - ENGAGEMENT QUALITY REVIEW
ENGAGEMENT QUALITY REVIEWS
Deals with assigning a reviewer for high-risk or listed clients. Sets the criteria of who qualifies to be a reviewer and how the review should be done
- APPOINTMENT AND ELIGIBILITY OF ENGAGEMENT QUALITY REVIEWERS
The goal is to create policies and procedures that ensure the responsibility for appointing an Engagement Quality Reviewer is given to an individual with the required qualifications, skills, and experience
- PERFORMANCE OF THE ENGAGEMENT QUALITY REVIEW
The performance of an EQR means doing a final, independent check of the audit’s most important decisions, to make sure they’re solid, ethical, and fully documented—before the audit is signed and sent out
- DOCUMENTATION
Engagement quality reviews must be documented and include:
- Names of the engagement quality reviewer and individuals who assisted with the engagement
- An identification of the engagement documentation reviewed
- The reason as to how and why the requirements of ISQM 2 have been met
- Notifications required to the engagement partner for quality review
- Date of completion of engagement quality review
ISA 220 QUALITY MANAGEMENT AT THE ENGAGEMENT LEVEL
It is for individual audits and the engagement partner is responsible for managing and ensuring quality throughout the audit
- LEADERSHIP AND CULTURE
The engagement partner must set an environment that emphasises
- ethical behaviour
- high quality work
- open communication
- RELEVANT ETHICAL REQUIREMENTS
The engagement partner ensures:
Independence is maintained.
The team complies with the Code of Ethics.
- ACCEPTANCE AND CONTINUANCE OF ENGAGEMENTS
Before starting or continuing an audit, the partner must evaluate:
Whether the firm is competent to perform the audit.
Any risks to quality, including conflicts of interest.
- ASSIGNMENT OF ENGAGEMENT TEAM
The team should have the right skills, time, and experience.
Supervision and mentoring are key.
- DIRECTION, SUPERVISION AND REVIEW
Partner must:
Clearly assign roles and expectations.
Monitor progress and review key audit work.
- CONSULTATION AND DIFFERENCES IN OPINIONS
Encourage team members to consult on complex or uncertain matters.
If disagreements arise, resolve them before the audit report is signed.
- ENGAGEMENT QUALITY REVIEW
For listed entities or other high-risk audits, an EQR is appointed (per ISQM 2).
The audit report cannot be issued until the EQR signs off.
- MONITORING AND REMEDIATION
If issues are identified during the audit (e.g. from internal inspections), the partner must take corrective actions and improve processes.
