Supporting International Standards

ISQM – The Full Picture – How Do the Components of a Quality Management System Fit Together? IAASB & IFAC Fourth and Final Quality Management Webinar

Natalie Klonaridis, Gabriella Kusz MBA, MPP, CPA, CGMA | April 4, 2022

The world has changed rapidly, and with it our profession. The quality management standards have introduced a modern approach to managing quality. In the journey to improving quality, the IAASB has addressed important issues such as governance and leadership, responding to a continually changing environment, and addressing the need for an approach that is scalable for smaller firms. In the first three parts of the Quality Management Webinar series produced by the IAASB in collaboration with IFAC, participants were introduced to three components that form part of a system of quality management: 

  • Webinar One: All You Need to Know about the Firm’s Risk Assessment Process; 
  • Webinar Two: Resources: Expectations for Firms and Engagement Partners; 
  • Webinar Three: What’s New for Firms’ Monitoring and Remediation Processes;

In addition to these components, there are five other components addressed in ISQM 1, many of which are similar to the elements in a system of quality control under the current ISQC 1.

It is essential that all components operate together in an iterative and integrated manner to achieve an effective system of quality management. In the fourth and final webinar “Bringing it All Together: Exploring all the Components of a Quality Management System,” participants can learn more about some of the components not covered in the first three webinars, including governance and leadership, relevant ethical requirements, and information and communication. The webinar also explains fundamental requirements introduced in ISQM 1 that contribute to a successful SOQM, such as the assignment of responsibilities related to the SOQM, network requirements or network services, the evaluation of the SOQM, and documentation. 

A significant emphasis in the fourth webinar is the importance of leadership responsibilities and firm culture. Ensuring that ultimate responsibility for the SOQM is embraced by the CEO, managing partner or managing board of partners (tone at the top) and that there is a commitment to quality through the firm culture, is crucial to building a successful SOQM.

Specifically, the fourth webinar explores in depth:

  • The various roles and responsibilities that need to be assigned in the context of the SOQM, and that individuals assigned these roles need to have appropriate experience, knowledge, time, influence and authority within the firm.
  • The various aspects of governance and leadership, including:
    • Leadership responsibility and accountability for quality, and demonstrating a commitment to quality through their actions and behaviors.
    • Embodying a commitment to quality through the firm culture.
    • Addressing resource needs – through planning, obtaining, allocating and assigning resources.
    • Appropriate organizational structure and assignment of roles, responsibilities and authority.
  • What has changed regarding requirements for relevant ethical requirements for the firm, its personnel and others (the network, network firms, individuals in the network or network firms or service providers). The webinar also clarifies the extent to which the firm’s SOQM needs to address the relevant ethical requirements that apply to others.
  • Information and communication to enable the operation of the SOQM. Among the aspects discussed in the webinar are:
    • The various elements of information and communication in the context of with whom information and communication may need to be undertaken.
    • The new requirement for the firm to establish an information system
    • Reinforcing the importance of two-way communication through the firm’s culture.
    • Communication externally.  
    • The firm’s responsibilities when it applies network requirements or uses network services (i.e., services or resources available from within the network).
    • The new requirement for firm leadership to evaluate the SOQM at least annually. The webinar explains:
      • The information that may be considered by firm leadership in undertaking the evaluation, such as the severity and pervasiveness of deficiencies, remedial actions and whether the effect of deficiencies have been appropriately corrected.
      • The conclusions that firm leadership may reach regarding the SOQM.
    • Requirements for documentation in ISQM 1. In particular, it explains:
      • The principles-based approach to documentation, through describing what documentation should aim to achieve.
      • The specific matters that ISQM 1 requires the firm to document about its SOQM.

How important is it for you and your firm to view this webinar session? The feedback speaks for itself:

  • Eighty-five percent (85%) of participants believed that they better understood how all the components of a quality management system work together after watching this seminar.
  • Eighty-one (81%) noted that they would be better able to apply the ISQM standards and integrate the various components of quality management into a holistic program of quality management after attending this session.
  • Seventy-nine percent (79%) believed they would be more likely to move forward in a timely manner (expediently) due to this webinar series.
  • After attending all four parts of the IAASB webinar series, eighty percent (80%) of respondents believed the ISQM changes they were trained to make to their firm's quality management system will increase the quality of their firm's audit services.

To view the recording of this event, please click on the video below:

 

To learn more about the IAASB’s four global quality webinars and to view recordings and obtain presentation materials, please visit:  https://www.iaasb.org/publications/quality-management-webinar-series

 

Natalie Klonaridis

Director, International Auditing & Assurance Standards Board

Natalie joined the IAASB in 2016, and has been involved in a number of key projects, in particular, firms’ systems of quality management (ISQM 1), audit evidence, and assurance on sustainability / ESG reporting. Natalie previously worked in Deloitte South Africa’s national office, and has a number of years of practical audit experience at both large and small audit firms. Prior to moving to the IAASB, she participated in various audit and assurance working groups and committees of the national standard setter in South Africa and the South African Institute of Chartered Accountants.  Follow Natalie on LinkedIn See more by Natalie Klonaridis

Gabriella Kusz MBA, MPP, CPA, CGMA

Gabriella Kusz was a principal, Strategic Initiatives, at IFAC where, in addition to other areas, she supported accountancy’s leadership and innovation in the digital era. Gabriella also serves as board director at the Global Digital Asset and Cryptocurrency Association, a global voluntary self-regulatory association for the industry where she supports awareness building and education. Prior to joining IFAC, she worked with the World Bank Group Governance Global Practice where she was responsible for leading the Corporate Governance and Financial Reporting workstream for the Middle East and North Africa region. In her volunteer time, she serves as a Distinguished Global Expert for the Global Small and Medium Enterprise Policy Network at Prince Sultan University (Riyadh, KSA), as an advisor to the Banque Saudi Fransi / PSU Global Islamic Finance, Tax and Zakat Centre, and as deputy chair of the Government Blockchain Association Regulator Working Group. Gabriella is a licensed US CPA (State of Virginia) and CGMA and holds AICPA Certificates in IFRS as well as the Global Reporting Initiative Certificate in Sustainability Reporting Standards. She holds a Master’s in Public Policy (International Policy and Development) from Georgetown University and a Master’s in Business Administration and Bachelor of Accounting from the University of Dayton. See more by Gabriella Kusz MBA, MPP, CPA, CGMA

 
 

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