New Quality Management Standard for Audit and Assurance Firms
Accounting practices providing any level of audit and assurance services– regardless of size– are required to comply with the Auditing Standard ASQM1 starting 15 December 2022.
What is ASQM1?
Auditing Standard ASQM1 is the Australian equivalent of ISQM 1 Quality Management for Firms that Performs Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements and will replace the current ASQC 1.
The standard requires all firms engaging in audit and assurance services to design, implement and operate robust quality management systems and procedures.
How will ASQM1 affect my accounting practice?
Affected accounting firms will face an entirely new approach in terms of quality and risk management. The new auditing standard introduces a quality management approach that focuses on proactively identifying and responding to risks that may have an impact on engagement quality.
As mentioned by ASF Audits head of education Shelley Banton, the new standard requires firms to “tailor it [the quality management approach] to the firm’s experience, the firm’s size, and the risks that we identify and assess from that firm’s perspective, to make sure that we’re seeing audit quality at the forefront of what we’re undertaking.”
Under the standard, firms will need to undertake risk assessments in areas such as governance and leadership, information and communication, ethics, engagements, performance and resources.
What are the core components of ASQM1?
ASQM1 addresses the following eight components:
- The firm’s risk assessment process
- Governance and leadership
- Relevant ethical requirements
- Acceptance and continuance of client relationships and specific engagements
- Engagement performance
- Information and communication
- The monitoring and remediation process
How can I prepare for ASQM1?
All accounting firms engaging in audit and assurance services will need to do a full review of their quality control systems. Documenting and reviewing your systems and processes can take a fair bit of time so it’s highly advised that you get started as soon as possible.
By December 2022, you should already have everything in place.
How can Quality Assurance for Accountants help me comply with the new standard?
Quality Assurance for Accountants is committed to helping accounting practices maintain compliance with current standards and improving their overall quality control system. We understand that complying with this new standard can take valuable time away from you doing chargeable work.
We are able to prepare the documentation needed to meet ASQM 1 and work through the process of meeting these new standards requirements with you.
We are very happy to have a chat with you about how we can help your practice meet ASQM 1 and other quality standards.
About Craig Allen
Craig Allen is a former quality assurance reviewer for CPA Australia and has helped more than 500 practices in Australia as a quality assurance consultant or quality assurance reviewer. Craig has a unique perspective, having also been in public practice for more than 30 years. Talk to Craig to find out how he can help your accounting practice get ready for a quality review and attain best-practice standards.