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The International Auditing and Assurance Standards Board (IAASB) issued its Exposure Drafts (EDs) 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.
Exposure Drafts
- 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 (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
- Proposed International Standard on Auditing 220 (Revised), Quality Management for an Audit of Financial Statements
ISCA takes a leading role in advocating the views and proposals of the audit community in Singapore. ISCA would hence like to seek views from key stakeholders in Singapore on the above proposals.
ISCA requires all comments to be submitted to technical@isca.org.sg by 30 April 2019.