With implementation date fast approaching firms should already be in the process of designing their quality management systems.
To whom does it applicable?
Firms performing any form of assurance engagements or related services engagements, audits or reviews of financial statements will have to implement ISQM 1. The effective implementation date is 15 December 2022.
By 15 December 2022 such firms are expected to:
- Establish the quality objectives, identify, and assess the quality risks and design and implement the responses; and
- Design and implement the monitoring activities.
With the implementation date around the corner all firms offering accounting and related services need to familiarize themselves with the new standard.
ISQM 1 replaces the old standard ISQC 1. Quality management raises the bar with for firms providing accounting and related services.
What are the key changes?
- More robust governance and leadership
- Introducing a risk-based approach focused on achieving the quality objectives
- Expanded requirements for resources
- Improving information and communication
- Proactive monitoring of the system, and timely and effective remediation
- Evaluating the system of quality management on an annual basis
- Addressing the use of networks
- More information on scalability
Read more on the Fact Sheet here
How do we go about implementing ISQM 1?
Most firms implemented a system of quality control based on ISQC 1. Much of the ISQC 1 standard is still applicable for the quality management system. However, firms need to understand and consider all the requirements of ISQM 1 to identify what has changed and additional requirements.
The ISQM 1 First time implementation guide issued by IFAC can provide a good starting point.
Read the First – time implementation guide here