The International Auditing and Assurance Standards Board (IAASB) seeks public comment by 1 July 2019 on three interrelated standards that address quality management. 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:
- Modernising 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.
- Overall Explanatory Memorandum, The IAASB’s Exposure Drafts for Quality Management at the Firm and Engagement Level, Including Engagement Quality Reviews
- Proposed 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 (previously ISQC 1)
- Proposed International Standard on Quality Management 2, Engagement Quality Reviews
- Proposed International Standard on Auditing 220 (Revised), Quality Management for an Audit of Financial Statements
Comments on the exposure drafts are requested by 1 July 2019.
Source: The International Auditing and Assurance Standards Board.