IFAC Quality Management Series: Small Firm Implementation - Installment THREE

IFAC Quality Management Series: Small Firm Implementation - Installment THREE

• 11 October 2024
• Auditing and Assurance
• South African Accounting Academy

Summary:

IFAC has published the third and final installment (entitled Monitoring and Remediation) in a three-part publication series to help small- and medium-sized practices implement the International Auditing and Assurance Standards Board’s (IAASB) quality management standards.

Article:

This publication provides tips and guidance for the practical implementation of the monitoring and remediation of a firm’s system of quality management – specifically on how firms can identify any deficiencies, and take corrective actions. It emphasises:

• How to determine the nature, timing, and extent of monitoring activities
• How to evaluate deficiencies, their causes, and their severity
• How to set up a process to respond to these deficiencies and communicate the findings within the firm
• The importance of continuous improvement through ongoing evaluation

Additionally, the guide includes helpful tools such as templates for annual reviews, annual monitoring and evaluation of the system of quality management, cyclical inspection of completed audits and other engagements, and monitoring and remediation reports. These are designed to simplify the monitoring process for small firms.

It also continues the case study introduced in the previous installments.

Recap of Earlier Installments

IFAC’s three-part series on quality management has been invaluable for small accounting firms. Here’s a quick overview of the previous installments:

• Installment One focused on the mindset shift required by the new standards, moving from a reactive approach (quality control) to a proactive one (quality management). It introduced the key principles of ISQM 1 and explained the new focus on managing risks to quality.
• Installment Two addressed Developing a Detailed Implementation Plan and offered a step-by-step guide on setting up a system of quality management. It walked firms through identifying quality objectives, conducting a quality risk assessment, and establishing the necessary responses to those risks. This installment also included an example case study showing how to transition from the old ISQC 1 standard to the new ISQM 1 framework.

Each part of the series builds on the previous one, offering practical advice and tools to make the transition smoother for SMPs.

This series joins IFAC’s collection of available resources that support quality management implementation, including webinars, articles and videos, as well as the IAASB first-time implementation guides, all of which are available at ifac.org/qualitymanagement.

Click here to download the 73-page Guidance document:

https://ifacweb.blob.core.windows.net/publicfiles/2024-09/IFAC-Quality-Management-Installment-3-Monitoring-Remediation.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• For South African accountants, especially those working in small firms, the transition to ISQM 1 is crucial. The new standard places greater responsibility on firms to manage quality proactively and continuously improve their processes. The guidance from IFAC, especially in this third installment, ensures that firms have a clear path to compliance, helping them deliver high-quality services to clients and meet global standards.
• Audit firms had to implement the suite of quality management standards which were issued in December 2020 and came into effect on 15 December, 2022.
• Auditors, Independent Reviewers and Accountants should be aware of the latest publications and guidance issued by regulators and standard-setting boards, such as IFAC, the IAASB, etc.

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