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ISQM1 and Quality Control for Audits

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Overview  

International Standard on Quality Management 1 (ISQM 1) has been effective since late 2022, yet the latest IRBA public inspections report reveals that many audit firms are still treating it like a tick-box compliance exercise. The fundamental shift from the reactive ISQC 1 to a proactive, risk-based System of Quality Management (SoQM) remains a significant stumbling block. Firms are struggling with root cause analysis, designing scalable systems for small and medium practices (SMPs), and documenting true leadership accountability. 

For registered auditors and firm leadership, treating your quality management system as a static manual is a direct path to an adverse IRBA finding. Failing to design, implement, and continuously monitor a tailored system that aligns with your specific client base compromises the integrity of your engagement performance. A generic, off-the-shelf system will not protect you; regulators expect a documented culture of quality, measurable remedial action plans, and clear accountability from the top down. 

Join Nestene Botha CA(SA) as she unpacks the key principles of ISQM 1, explains the practical implications for audit firms and provides structured guidance on designing and maintaining an effective system of quality management that enhances audit quality, governance and professional compliance. 

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Learning objectives  

Attending this webinar will equip you with the following skills: 

• Develop a comprehensive understanding of ISQM 1, including its scope, objectives and key components. 

• Identify the critical changes introduced by ISQM 1 compared to ISQC 1 and their immediate impact on firm-level quality management. 

• Apply a proactive, risk-based approach to designing, implementing and operating a system of quality management tailored to your firm. 

• Understand the interaction between ISQM 1, ISQM 2 and ISA 220 (Revised) to achieve quality at both the firm and engagement level. 

• Implement practical monitoring, root cause analysis and remediation protocols to ensure continuous improvement within your quality management system. 

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Content 

The webinar will cover the following topics:  

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

  • Applicability and scope of ISQM 1  

  • Objectives of ISQM 1 

  • Definitions and key concepts  

  • Effective date and transitional considerations  

• Key Changes from ISQC 1 to ISQM 1  

  • Shift from quality control to quality management  

  • Risk assessment process and quality objectives  

  • Enhanced leadership and governance responsibilities  

  • Proactive monitoring and remediation requirements  

• Structure and Components of a System of Quality Management  

  • Governance and leadership  

  • Relevant ethical requirements (including independence)  

  • Acceptance and continuance of client relationships and specific engagements  

  • Engagement performance  

  • Resources (human, technological and intellectual)  

  • Information and communication  

  • Monitoring and remediation process  

• Relationship between ISQM 1, ISQM 2 and ISA 220 (Revised)  

  • Engagement Quality Reviews under ISQM 2  

  • Responsibilities of the engagement partner under ISA 220 (Revised)  

  • Integration between firm-level and engagement-level quality management  

• Scalability and Tailoring of ISQM 1  

  • Application to small and medium-sized practices  

  • Complexity considerations  

  • Documentation requirements  

• Practical Implementation Considerations  

  • Identifying and assessing quality risks  

  • Designing responses to quality risks  

  •  Establishing monitoring activities  

  • Remediation and root cause analysis  

  • Common implementation challenges