In late 2020, the International Auditing and Assurance Standards Board (IAASB) issued three new and revised quality management standards. The standards strengthen and modernize how a firm of any size or level of complexity approaches quality management.

• They address the evolving and increasingly complex audit ecosystem, including growing stakeholder expectations and a need for quality management systems that are proactive and adaptable.
• They mark an evolution from a traditional, more linear approach for quality control to an integrated quality management approach.
• They recognize the importance of firm governance and leadership, with quality embedded in the fabric of the firm’s culture, strategic and operational decisions, and leadership’s actions and behavior.

The standards also drive more robust and effective monitoring and remediation. At the engagement level, they increase the responsibility of engagement partners for managing and achieving audit quality. And they bolster who can perform engagement quality reviews and how the reviews are performed.

Professional Accountancy Organizations

For PAOs, the new and revised standards are an opportunity to champion audit quality by driving the necessary collaboration between key national stakeholders.

Moving from binary, compliance-based processes to a much more proactive, dynamic, risk-based quality management approach is crucial to improving audit quality. We have a responsibility to do what is best in serving the public interest. Taken together, these new standards should establish a new baseline architecture to foster change, progress how firms consistently manage and achieve quality, and better align with the needs of all participants in the financial reporting ecosystem.

Transformation at the national level will involve extensive education and change management for firms, regulators and educators, among others. As PAOs, you can be an agent of change; you have the opportunity to facilitate a coordinated approach to adoption and implementation in the public interest.