For audits to be effective and maintain public trust, they must be performed in a way

that ensures firms and their personnel fulfil their responsibilities in accordance with
applicable legal and professional standards. It is imperative that audit firms adopt a
culture of best practice in accordance with these standards, enabling audit partners
in issuing appropriate auditor’s reports. The threats of self-interest caused by
increasing financial pressure on audit partners will compromise auditor reports, as
will the issues of poor planning, inadequate risk assessment and lack of resources
and audit evidence. The International Auditing and Assurance Standards Board
(IAASB) issues quality standards to support firms in achieving this aim.

The current standards in this area are International Standard on Quality

Management (ISQM) 1, Quality Management for Firms that Perform Audits or
Reviews of Financial Statements and ISQM 2, Engagement Quality
Reviews, alongside ISA 220 (Revised), Quality Management for an Audit of
Financial Statements.

These standards are examinable in Advanced Audit and Assurance (AAA) and
candidates are expected to be able to demonstrate an understanding and
application of the key principles. Quality management is pervasive to the
performance of audits and so it is also pervasive to the AAA exam with aspects
potentially arising multiple times within a single exam.

This article focuses on ISQM 1; a second article will look at ISQM 2 and ISA 220
(Revised). There are examples provided demonstrating how certain aspects of quality
management may be examined. These are intended to indicate potential ways
candidates may encounter questions on quality, however, these are illustrative
examples only and should not be considered comprehensive; alternative examples
and aspects are also examinable.

Key principles underlying the quality standards

The quality standards are focused on public interest, with the hope of addressing
some of the circumstances where audit failure has occurred. The need for audit
partners and audit teams to exhibit professional scepticism, with an independent
and challenging mindset, is emphasised. This is especially important when assessing
client judgements and estimations. Audit teams need to have the competence and
support to do this without fearing negative implications. The quality standards adopt
a proactive attitude to quality in firms rather than a compliance (‘tick box’) approach
and one which is scalable from small firms to large multinational networks.

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There is a need to ensure audit quality evolves; there must be scope within quality
guidance for a firm’s processes to change as technology and business practices
change.

There is also focus on improving both internal and external monitoring of firms and
their networks and on improving communication, both internally and to external
parties such as those charged with governance (TCWG) and regulators.

ISQM 1, Quality Management for Firms that Perform Audits or Reviews of Financial
Statements, or Other Assurance or Related Services Engagements

ISQM 1 embeds this approach through a principle driven requirement for firms to
create a system of quality management (SoQM) which is tailored to the firm and its
client base. This scalability enables firms to design a system which addresses their
specific circumstances and risks.

The SoQM must address eight components

1. Firm’s risk assessment process

Firms must design and implement a risk assessment process that sets quality
objectives and identifies risks. The firm’s specific situation and environment is
considered and will include the technologies employed by the firm, their networks,
and any external service providers. This is an ongoing monitoring process rather than
one-off, enabling the SoQM to adapt with any changes.

This approach will allow the firm to tailor to address the specific risks within their
firm, and it will vary according to the size of the audit firm and their client portfolio.

By maintaining this tailored focus on risks and their mitigation, the firm should be
able to focus on ensuring the right engagement or audit report is issued for each
assignment. This may be due to more competent and well-trained individuals
performing complex or risky audits, audit partners feeling more empowered to issue
modified audit reports, by ensuring acceptance procedures fully identify threats to
independence and ensure safeguards are enacted and many other factors. The most
crucial point is that this approach is tailored to address the specific risks arising in
specific firms and not expected to be the same for every audit firm regardless of size
or client portfolio.

Exam focus

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 In the AAA exam, candidates may be required to explain and/or evaluate a firm’s risk
assessment process and make recommendations for improvement.

2. Governance and leadership

Firms should create an environment which demonstrates a commitment to quality
through its culture and recognises its role in serving the public interest. This
responsibility is firm wide rather than at the individual audit level, with the chief
executive or managing partner assigned the responsibility and accountability for the
SoQM. This should ensure the ‘tone at the top’ enforces a commitment to quality
and ethics across the whole firm.

Systems and policies should be in place to reward commitment to quality rather than
focusing on client retention and engagement profit. This should allow audit
engagement partners to challenge client judgements without fear of the negative
consequences of losing the revenue arising from the loss of the client. In this way, all
employees of the firm are supported to fulfil their legal and regulatory requirements
without undue commercial pressures or self-interest resulting in inappropriate
decision making.

Exam focus
Candidates may be required to explain the importance of governance and leadership in
maintaining the SoQM or may be required to evaluate a scenario’s weaknesses in this area,
alongside recommendations for improvement.

3. Relevant ethical requirements

The SoQM should include objectives and policies for ensuring the fulfilment of ethical
requirements. These processes will again differ depending on firm size and client
portfolio; the scalability of the standard requires firms to have in place mitigations
for ethical risks arising which are appropriate to the firm rather than a fixed response
to a given risk.

Not only must a firm ensure its own personnel understanding of and compliance with
relevant ethical requirements, for example, through training and ethical declarations
such as independence forms, firms must also ensure that any component auditors in

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a group understand and apply the ethical regulations applicable to the group
auditor.

Relevant ethical requirements for a firm depend on the jurisdiction it operates in;
these may go beyond those set out in the IESBA International Code of Ethics for
Professional Accountants (the Code). It is also the case that many firms will have in
place policies to mitigate ethical threats which go beyond the minimum required by
the Code and regulatory requirements of the jurisdiction in which the firm operates:
ISQM 1 requires firms to ensure these requirements are also captured by the SoQM.
For example, many firms or jurisdictions prohibit the acceptance of gifts, even of
trivial value. Failure to adhere to the firm’s policies would be seen as a failure of its
SoQM despite not giving rise to a breach of the Code.

Scalability of the standard enables firms to mitigate for ethical risks arising which are
appropriate to the firm, for example, a firm which is part of a large network will
require more detailed processes to identify possible conflicts of interest between
clients than those in a smaller firm.

Exam focus
Candidates may be asked to appraise ethical threats arising in the scenario, whilst also
considering whether the firm is compliant with the firm’s SoQM. The issues of quality
management and ethical issues are inherently interlinked and as such, they may need to
consider the significance of such threats and the availability of suitable safeguards within the
context of the engagement, the firm and the SoQM as well as other available information. This
enables candidates to obtain professional skills marks in addition to the technical marks as
they are recognising the inherent ethical requirements regarding quality management on a
firm wide basis.

Candidates may be asked to identify breaches of the SoQM which may not breach
the Code but are relevant to the given scenario addressing any resulting implications for the
engagement, the firm or making recommendations to prevent future breaches.

4. Acceptance and continuance of client relationships

ISQM 1 places additional emphasis on the procedures addressing client acceptance
and continuance of existing business relationships. Firms must assess the integrity
and ethical values of the client and its management, as well as the firm’s ability to
perform the engagement within legal and professional requirements. The SoQM
should ensure that the firm’s financial and operational priorities do not lead to
inappropriate judgements when deciding whether to accept or continue with a client

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engagement. The decision to continue with or accept a new client should focus on
the firm’s ability to provide a quality engagement.

Existing business relationships should be reassessed at the start of each new year
prior to reappointment as auditor. This may mean performing fresh identity checks,
reperformance of independence declarations of employees, and re-evaluating
conflicts of interest and/or competence to perform the audit. It will also involve
assessing whether new information, had it been known at point of acceptance,
would have prevented the firm from accepting the client. For example, a client
involved in breaches of regulations may not be a client with values compatible with
the audit firm.

Exam focus
Candidates may have to discuss the importance of acceptance and continuation assessments
or to apply the requirements of ISQM 1 in this regard when evaluating whether to accept a
new client, undertake additional work for existing clients or accept reappointment for the
audit of a continuing client. The ISQM 1 framework provides a starting point for evaluating the
scenario and this may be extended into other professional and commercial considerations.
Candidates should consider legal, regulatory, and ethical considerations as well as professional
and availability of resources when considering a new client engagement.

Candidates should be aware that the ability to perform the engagement within legal and
professional requirements will incorporate legal, regulatory, and ethical considerations,
including the availability of resources when considering a new client engagement. and
requirements covering acceptance may be extended into other professional and commercial
considerations.

The cyclical nature of continuation considerations means that this aspect of quality
management may impact questions at all stages of the audit process and the considerations
regarding client acceptance are likely to apply to audit and non-audit assignments.

5. Engagement performance
Engagement teams must understand their responsibilities for ensuring a quality
audit. Less experienced engagement team members should be appropriately
supervised and reviewed. ISQM 1 specifically references the need for the audit
engagement partner to be sufficiently and appropriately involved throughout the
engagement.

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Audit teams should ensure professional scepticism and judgement are exercised.
Processes should ensure professional scepticism and judgement are exercised by
engagement teams. If an audit team has insufficient time to perform necessary
procedures, or team members are not experienced enough to challenge
management or identify misstatements, then detection risk increases and audit
quality will be compromised. For audits to be effective, and to maintain public trust,
they must be performed in such a way as to ensure the audit reports issued are
appropriate in the circumstances and that firms and their personnel fulfil their
responsibilities in accordance with applicable legal and professional standards.

The SoQM should ensure that teams can consult on contentious matters; differences
of opinion within the engagement team are addressed and any issues raised by the
engagement quality reviewer are brought to the attention of the firm and resolved.

Further detail on these aspects will be addressed in the second article where ISA 220
(Revised) will be examined, including examples of how these may be examined.

6. Resources
A firm must ensure that appropriate resources are available in a timely manner. This
includes employees with the required competence, training, and capabilities to
perform the engagements to which they are assigned. Firms should ensure more
experienced individuals to work on areas of a complex nature requiring additional
judgement and ensuring sufficient review by senior team members or allowing
adequate time to do sufficient testing and analysis of the issues.

Consideration should be made to use independent experts where the firm does not
have appropriate personnel, or if the firm requires additional specialist technological
resources.

Exam focus
Candidates may have to evaluate scenarios where inappropriate resources have been
employed within an audit and make recommendations for improvements to the firm’s SoQM.

7. Information and communication

Information and communication are required to enable other components of the
SoQM to operate. This includes obtaining, generating and using information and
communicating the information within the firm, for example, communicating policies
to personnel, communication of information obtained during an audit with an

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 engagement quality reviewer, or communication between group and component
auditors. It also includes external communications such as to TCWG or a regulator.

ISQM 1 considers information and communication to be pervasive to all components

of the SoQM as without it, the system cannot operate. The full range of information
and communications within the SoQM is extensive; the boxed text below considers
just a few examples in some of the elements of ISQM 1 for context.

Ethical and professional requirements

 The firm’s policies on ethics

 Training material
 Registers of training undertaken
 Completed independence declarations

Client acceptance and continuation

 Risk assessments documented

 Client identity documents obtained and stored
 Engagement letters issued

Engagement performance

 Audit programmes devised/produced

 Role assignments delegated and recorded
 Client information obtained and input into automated audit tools
 Conclusions documented in audit file
 Reports to management and TCWG

Communications should be made in a timely manner supporting the firm’s culture to

exchange information where appropriate, for example where an ethical threat
precludes the assignment of a team member to a specific client, the team member
would be expected to inform the firm.

ISQM 1 also makes specific reference to external communications required to

maintain audit quality. This includes communication within the firm’s network and
with service providers, communications required by law or professional standards,
such as when there is a specific requirement to report a client’s non-compliance with

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certain laws and regulations to TCWG.

Exam focus
Candidates may have to evaluate scenarios with respect to these issues and make
recommendations for improvements to the firm’s SoQM in this area. Candidates should
remember that I&C is embedded within all aspects of a SoQM and may not be isolated as a
topic.

8. Monitoring and remediation process

Firms must put in place a process for monitoring the SoQM’s effectiveness and
ensure deficiencies are identified in a timely manner, allowing corrective actions to
be implemented. This process is a continuous cycle which firms are specifically
required to undertake.

Exam focus
Candidates may have to explain how this contributes to continuous improvement of a firm’s
SoQM. Candidates may also take the role of a reviewer performing this element of the
process: identifying deficiencies and making recommendations to remediate them.

Conclusion

ISQM 1 provides a focus on audit quality and a process of risk management with
respect to quality that aims to ensure all firms have quality as a priority when
performing audits and other assurance engagements. The standard is principles
driven with a focus on scalability, flexibility and continuous improvement.

Quality management is core to audit, and a detailed understanding of the

importance of both audit quality and quality management underlies the performance
of an audit. Quality is a key part of ensuring that audits are fit for purpose and retain
the public trust. As such, it is key to every audit and every stage of the audit process
and candidates should expect to see aspects of quality management examined at all
stages of an audit in exam questions and in either section of the exam.

Candidates can find more explanation of the requirements of ISQM 1 in the appendix
to the standard, available on the IAASB website.

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 Further reading

 Introduction to ISQM 1, Quality Management for Firms that Perform Audits or

Reviews of Financial Statements, or Other Assurance or Related Services
Engagements (Dec 2000), www.iaasb.org
This is a useful summary of the key points of ISQM 1 prior to reading the Final
Pronouncement (Dec 2020)

 The global call for high quality, independent audits (Jun 2019), www.accaglobal.com
A useful summary of some of the reasons for the change

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 This second article on quality management focuses on two specific areas.
International Standard on Quality Management 2, Engagement Quality
Reviews (‘ISQM 2’), and ISA 220 (Revised), Quality Management for an Audit of
Financial Statements. Candidates are expected to have an understanding of the
requirements of these two standards and may face discussion questions regarding
the purpose and content of these standards. Candidates are also expected to be able
to apply this knowledge to scenarios.

ISQM 2, Engagement Quality Reviews

An engagement quality review (EQR) is an integral part of the audit process for many
audits. An EQR is defined by the IAASB as an ‘objective evaluation of significant
judgements made by the engagement team and the conclusions reached thereon,
performed by the engagement quality reviewer (the reviewer) and completed on or
before the date of the engagement report'.1

Candidates should note this is a very specific term and should avoid the use of
‘second partner review’, ‘concurring review’, ‘independent partner review’ or ‘hot
review’ in the exam as these terms are subject to different interpretations and may
not mean the same thing. Candidates should also be aware, when proposing an EQR,
that they specify which engagement would be subject to such a review if the firm is
providing more than one service.

ISQM 2 aims to ensure the right person is appointed to perform the review and
clarifies the responsibilities associated with the role. It seeks to emphasise the
importance of, and to improve the effectiveness of, EQRs.

ISQM 1 details the requirements when an engagement is subject to an EQR.

Scope of engagement quality reviews

ISQM 1 requires firms conduct an EQR on audits of listed companies, audits and
other engagements where an EQR is required by law or regulations and audits or
other engagements for which the firm determines that an EQR is an appropriate
response to address one or more quality risks. Examples of this include:

 Audits which involve a high level of complexity or judgement due to significant

accounting judgements with high degrees of uncertainty, such as banks or oil
exploration companies or where specialised skills and knowledge is required to
evaluate underlying subject matter such as greenhouse gas emissions.

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 Audits where significant issues have been encountered, such as a material
restatement of comparatives.

 Audits or engagement for which unusual circumstances have been identified during
acceptance and continuance procedures, such as a disagreement with the previous
auditor.

 Engagements involving reporting to be included in regulatory findings which may

contain a high degree of judgement, such as a listing prospectus.

 Audits and engagements for which the firm has no prior experience.

 The use of an EQR to mitigate ethical threats identified.

Exam focus
Candidates may be required to identify situations where an EQR should be performed either
because it is required by legal or professional requirements or because it is an appropriate
response to a situation or quality management risk arising in a scenario.

Appointment and eligibility of engagement quality reviewers

To ensure the effectiveness of an EQR, it is important that the person performing the
review is appropriate. ISQM 2 provides guidance on who is eligible to be appointed
to this role:

 An engagement quality reviewer (‘reviewer’) cannot be a member of the audit

engagement team so that they remain objective and independent of the audit. The
reviewer needs to consider whether the audit team has applied appropriate
professional scepticism. A two-year cooling off period is required before an audit
engagement partner can act as a reviewer for their former client.

 The reviewer must be competent and capable of performing the role including
understanding the legal and professional framework, firm policies relevant to the
engagement and have an appropriate knowledge of the client industry. They should
have an understanding and experience of similar engagements and understand the
responsibilities in performing and documenting an EQR.

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 Reviewers must have appropriate authority within the firm to allow them to
challenge the audit engagement partner. The culture of the firm should be one
where the views of the engagement quality reviewer are treated with respect and
not subject to influence or pressure from the audit engagement partner.

 The reviewer must comply with relevant ethical requirements and the provisions of
laws and regulations relevant to the jurisdiction in which they are operating. In the
same way that an audit partner may be impacted by intimidation by a client, and
reviewer may be impacted by intimidation, for example if the audit partner for the
client is aggressive or dominant individual or the reviewer has a reporting line to the
engagement partner.

 The reviewer may be a member of the audit firm or external to the firm.

Exam focus
Candidates may be required to demonstrate an understanding of why these criteria are in
place either through discussion, or through application to a scenario, for example, recognising
and explaining where an ineligible person has assigned the role of the reviewer or has been
prevented from performing their role effectively.

Responsibilities of the engagement quality reviewer

In order to enhance the robustness of the EQR process, ISQM 2 clarifies the
responsibility of the reviewer. There is a requirement to perform procedures at
different points in time during the engagement, so the reviewer may be involved
during the planning stage as well as during the audit, rather than just at the
completion stage.

The reviewer is required to review and understand the significant judgements made
by the engagement team. They will assess whether the audit engagement
documentation supports those judgements and whether the conclusions reached are
appropriate. In doing so, the review will specifically evaluate whether the
engagement team has exercised professional scepticism in reaching those
conclusions.

The reviewer is also required to evaluate:

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 the engagement partner’s determination that independence requirements have
been fulfilled, and
 whether appropriate consultation has taken place on difficult or contentious matters.
 Whether the engagement partner has sufficient and appropriate involvement on the
audit engagement to be able to assess the judgements and conclusions reached by
the engagement team.

ISQM 2 also includes a ‘stand back’ requirement for the reviewer to determine
whether all the requirements for the EQR have been met and whether the review is
complete. An audit report cannot be dated before the reviewer determines the
process is complete.

Exam focus
Understanding the full responsibilities of the reviewer will enable candidates to evaluate a
scenario to determine whether an EQR has been performed as required and to identify
where deficiencies in the process have occurred.

Documentation

ISQM 2 specifically requires the reviewer to be responsible for the documentation of

the EQR which must be filed with the audit documentation. This must be sufficient to
allow an experienced practitioner, having no previous connection to the engagement
to understand the nature, timing and extent of the EQR procedures performed.
Individual firms may have policies and procedures that go further than this as part of
the System of Quality Management (SoQM) of the firm.

Exam focus
Candidates may be required to evaluate whether sufficient appropriate documentation exists
within a scenario or recommend improvements to the firm’s SoQM to mitigate any
weaknesses.

Importance of the EQR

The responsibility of the EQR process remains at the firm level and is part of the
wider SoQM as stipulated by ISQM 1. This ensures the robustness of the EQR process
leading to an improvement of audit quality by assessing audit team’s professional

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 scepticism when making judgements and whether the audit evidence supports the
final conclusions.

ISA 220 (Revised), Quality Management for an Audit of Financial Statements

ISA220 (Revised) concerns the specific quality considerations for an audit of financial
statements and, hence, has a more limited scope that ISQM 1 and ISQM 2 which are
firm wide. Here the engagement team, lead by the audit engagement partner is
responsible for the compliance with the standard as part of the firms SoQM.
Specifically, they are responsible for:

 implementing the firm’s policies and procedures in response to quality risks

applicable to the audit
 determining whether to devise and implement additional policies and procedures
beyond those of the firm
 communicating to the firm any information from the audit that is required to be
communicated by firm policies – eg independence confirmations from the team,
timesheets for the audit team, raising of contentious issues with an EQR in a timely
manner etc.

The audit engagement team is required to plan and perform the audit with
professional scepticism, whilst exercising professional judgment in order to ensure a
quality audit is performed supporting the correct audit opinion. An audit should be
performed in such a way to mitigate where there may be problems exercising
appropriate professional scepticism – eg those arising through unconscious bias (for
example, assuming the client is correct) or resource constraints. The audit partner is
ultimately responsible for the quality of the specific audit which gives reasonable
assurance that:

 the audit has been conducted in accordance with professional standards and
applicable legal and regulatory requirements, and
 the auditor’s report issued is appropriate in the circumstances.

Two key areas where ISA220 (Revised) provides specific guidance over and above
that in ISQM 1 are those relating to engagement resources and engagement
performance. These topics are regularly examined in the context of scenarios in a
quality management question. Whilst the full standard is examinable, candidates’
responses in these two specific areas are often poorly constructed or vague and
hence a more detailed understanding of the requirements in this area will be
valuable.

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Engagement resources

ISA220 (Revised) states that the audit engagement partner is responsible for
ensuring sufficient and appropriate resources are available to the engagement team
in a timely manner and in line with the firms policies and procedures. This includes
changes to resources required as circumstances change during the audit. The partner
is also responsible for ensuring the engagement team and any external expert and
internal auditors providing direct assistance to the team have appropriate
competence to perform their assigned roles.

Exam focus
Candidates may be required to evaluate quality management issues in a scenario and, are
expected to be specific in their descriptions. See the example described below:

Consider a situation where the audit supervisor was off work for health reasons and the audit
engagement manager was too busy to help out the team performing the audit fieldwork. As a
result, the audit juniors have been left to perform all the audit procedures on their own
including the impairment of properties which were identified as high-risk during planning.

A well explained evaluation might be as follows:

‘An audit junior has performed the audit of property impairments which contain a high level of
judgement when assessing managements estimates. As this is an area identified as high risk
at planning, and is subjective, the junior may not have the technical knowledge to audit this
area and may have felt unable to challenge management sufficiently when auditing this area.
In the absence of the audit supervisor or more senior staff, the junior will not have been able
to consult on difficulties face whilst following the audit programme and there has been a lack
of supervision which could mean any problems have not been picked up in a timely
manner. Overall, these factors will increase the risk that insufficient or inappropriate
evidence has been obtained in this area and a material misstatement may not be identified’

A weaker response might simply say:

‘Not enough resources were available. This is not a quality audit’

The first answer has specific points of development, the latter has simply identified the issue
with no evaluation. This means the latter response achieves fewer technical marks for
demonstrating an understanding of the issue and that it is not possible to assign analysis and
evaluation marks.

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 The first answer will be more likely to obtain professional skill marks for scepticism and
judgement as they have demonstrated challenged the ability of the junior to perform the task
sufficiently to provide audit evidence. Note that the first answer doesn’t just state that quality
is poor, they explain why this is audit area may not be performed with sufficient quality.

Engagement Performance

ISA220 (Revised) provides specific guidance on the performance of individual audits.

The audit engagement partner is responsible for the direction and supervision of the
engagement team’s work and the review of their work. In order to do this, the
engagement partner must determine that the audit is planned and performed in
accordance with the firm’s policies and procedures, professional standards and
applicable legal and regulatory requirements, and also that changes can be made to
the resources available to the team where circumstances change.

The audit partner is expected to review the audit documentation relating to

significant matters and judgements, contentious issues and the conclusions reached.
This is performed at appropriate stages during the audit. For example, the audit
partner would be expected to review the determination of materiality for the audit
which would likely be most appropriately reviewed at the planning stage of the audit.
If circumstances change and materiality is reassessed, then the audit partner may be
expected to review this during the audit itself. The audit partner must also ensure
that sufficient appropriate evidence has been obtained to support the opinion in the
auditor’s report before the audit report is issued.

In addition to these responsibilities on each and every audit, it is also required the
partner takes responsibility for the audit team undertaking consultation on difficult
and contentious matters. This consultation may be within the audit team, where a
more junior member may seek guidance from more senior team members or it may
be external to the team, either within the firm, for example with the firm’s own
experts and specialists or external to the firm.

The audit engagement partner is also required to ensure an engagement quality

reviewer is appointed where necessary and that the engagement team cooperate
with the reviewer, including ensuring all significant matters and judgements arising
with respect to the audit are discussed with the reviewer. The audit partner should
not date the audit report until the EQR is complete and any differences of opinion
are resolved.

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 Exam focus
Candidates are often required to evaluate quality deficiencies in an audit, sometimes pre-
issuance of the audit report, sometimes post-issuance. The evaluation should refer to specific
deficiencies and their implications rather than make broad comments that the audit was not
properly supervised or reviewed. It would be expected that candidates identify the specific
instance where review was omitted or when more supervision should have occurred and how
that would have altered the outcome of events.

Candidates should also note that without the analysis documented, it is not possible to credit
a reasoned conclusion so simply stating ‘a quality audit was not performed’.

Actions proposed by candidates in response to the quality management issues identified

must be appropriate for the stage in the audit. A review identifying a lack of evidence prior to
the issuance of the audit report can be mitigated by obtaining that evidence before signing
the audit report, identifying a material misstatement at this stage can lead to a qualification of
the audit report.

However, where an audit report has already been issued, the option to qualify the audit
report is not available, and other actions are required.

Conclusion

The quality standards provide the fundamental framework for embedding quality
into every audit and reducing audit failures, helping to identify where professional
standards may not have been followed or an inappropriate audit report may have
been issued. These standards firmly place the responsibility for audit quality at the
firm level rather than the level of an individual audit partner and have been designed
to be flexible and scalable whist permeating every part of every audit.

A focus on quality throughout the audit firm should lead to better audits and more
accountability.

Candidates should expect quality management to permeate all areas of the exam
and should familiarise themselves with the standards.

Further reading
Candidates should be familiar with the most recent quality standards which may be
accessed from the IAASB webpage.

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(1). International Standard on Quality Management 2: Engagement Quality Reviews,
IAASB (www.iaasb.org)

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