The IAASB’s Enhancements to Quality Management
Joy Thurgood Principal, IAASB
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The IAASB recently released for public comment three interrelated exposure drafts 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 Exposure Drafts comprise:
The exposure drafts are accompanied by an overall Explanatory Memorandum, The IAASB’s Exposure Drafts for Quality Management at the Firm and Engagement Level, Including Engagement Quality Reviews that explains the interrelationships and overlapping issues.
Among the proposals is a new risk-based approach that firms are required to use in managing engagement quality. The new approach will compel firms to be proactive, responsive and thoughtful about the nature and circumstances of the firm and the engagements it performs in designing, implementing and operating its system of quality management. Furthermore, the engagement partner will have a greater role in managing and achieving quality at the engagement level based on the nature and circumstances of the engagement.
Other key changes across the three standards include:
In addition to the proposed standards, the IAASB has released practical examples and guidance to demonstrate how the ISQM 1 proposals may be applied and to provide support for understanding certain aspects of the standards.
More information about the proposals is available at www.iaasb.org/quality-management. Comments on the proposals are due by July 1, 2019.
The IAASB have also organized a series of webcasts during the comment period to take participants through key aspects of the proposals:
The webcasts will also include an opportunity for participants to ask questions, or participants may submit questions beforehand to armandkotze@iaasb.org.