QUALITY CONTROL

• What is quality management in auditing?

  A system ensuring professional competence and standards
• What is the purpose of quality management in auditing?

  To reduce audit failure and risk
• Who should take ultimate responsibility for audit quality?

  The audit engagement partner
• Why should quality audit services be provided?

  • To ensure compliance with professional standards
  • To restore and enhance public confidence
• At what levels must quality management in auditing be developed?

  • Professional level (technical and ethical standards)
  • Firm level (policies for practice)
  • Engagement level (policies for each engagement)
• What should audit firms develop to ensure compliance with ISAs?

  Quality management policies and procedures
• What quality issues are addressed at the firm level?

  • Standard audit manual or program
  • Ethical policies and procedures
  • Client acceptance and audit fee policies
• What quality issues are addressed at the engagement level?

  • Accepting new appointments
  • Qualified staff performance
  • Supervision of audit procedures
• What does ISQM1 focus on?

  Quality management at the firm level
• What does ISQM2 focus on?

  Quality management at the engagement level

  
• What does ISA220 (Revised) address?

  Elements of quality control at the engagement level

  
• What are the elements of quality control at the engagement level?

  1. Leadership responsibilities for quality
  2. Firm's risk assessment process
  3. Governance and leadership
  4. Relevant ethical requirements
  5. Acceptance and continuance of clients
  6. Engagement performance
  7. Resources
  8. Monitoring and remediation
  9. Information and communication
• What is the role of leadership in quality management?

  Support and reinforce the importance of quality
• What is the purpose of the Know Your Client (KYC) policy?

  To evaluate existing and prospective clients
• What should engagement performance ensure?

  Capability to deliver high-quality work
• What are the four elements of resources that must be managed by the firm?

  • Human resources
  • Technological resources
  • Intellectual resources
  • Service providers
• What is the purpose of monitoring and remediation in quality management?

  Ensure relevance and compliance of policies
• What are the key components of information and communication in quality management?

  • Effective communication channels
  • Accessibility of information
  • Feedback mechanisms
  • Continuous updates and training
• What is the role of the Audit Oversight Board (AOB)?

  Ensure independent audit oversight for PIEs
• Why was the AOB established?

  To enhance the credibility of audited statements
• What are the key responsibilities of the AOB?

  • Implement effective audit oversight policies
  • Register auditors of PIEs
  • Direct MIA on auditing standards
  • Conduct inspections and monitor compliance
  • Impose sanctions on non-compliant auditors
• What is the purpose of the registration process by AOB?

  Ensure auditors are fit and proper
• What powers do inspection officers have under AOB?

  Access working papers and take information
• What triggers an inquiry by the AOB?

  Reason to believe guidelines are breached
• What types of sanctions can AOB impose?

  Suspension or revocation of approval
• What are the functions of the SC relating to audit oversight?

  1. Promote an effective audit oversight framework
  2. Promote confidence in audited financial statements
  3. Regulate auditors of public interest entities
• What is the purpose of Practice Review by MIA?

  Ensure adherence to auditing standards
• What does Practice Review empower MIA to do?

  Carry out surveillance on audit firms
• What are the findings from Practice Review exercises intended to ensure?

  Compliance with ISAs and professional standards
• Four examples of audit deficiencies

  • Tendency to accept management's representations without adequate verifications
  • Inadequate documentation of audit work
  • Failure to report any departures from accounting standards
  • Uncritical acceptance of questionable accounting practices
• Various functions/responsibilities of AOB

  Functions:

  • Registration
  • Inspection
  • Inquiry
  • Sanctions
  • Standard setting