1.1 Audit quality is about delivering an APPROPRIATE professional OPINION
supported by the necessary EVIDENCE and JUDGEMENTS.
1.1.1 Good leadership
1.1.2 Experienced judgement
1.1.3 Technical competence
1.1.4 Ethical Values
1.1.5 Appropriate client relationships
1.1.6 Proper working practices
1.1.7 Effective quality control &
monitoring review processes
2 ISQC 1 - QUALITY CONTROL AT A FIRM LEVEL
2.1 Purpose of ISQC1
2.1.1 The objective of the firm is to establish & maintain a system of quality control to provide it with reasonable assurance that:-
22.214.171.124 The firm & its personnel comply with
professional standards & applicable legal &
126.96.36.199 Reports issued by the firm or engagement partners are
appropriate in the circumstances
188.8.131.52 All quality control [policies should be DOCUMENTED & COMMUNICATED to the firms personnel
184.108.40.206 FIRM & LEADERSHIP RESPONSIBILITIES FOR QUALITY WITHIN THE FIRM
220.127.116.11.1 Appropriate training is provided to ensure there is complete understanding of the objectives & procedures under
18.104.22.168.1.1 Firm implements policies such that the INTERNAL CULTURE of the firm is one where QUALITY is considered to be ESSENTIAL
22.214.171.124.1.1.1 The entire business strategy of the audit firm should be driven by the need for quality in its operations.
126.96.36.199 HUMAN RESOURCES
188.8.131.52.1 Policies & procedures on ensuring excellence in its staff, to provide the firm with 'reasonable assurance' that it has
sufficient personnel with the CAPABILITIES, COMPETENCE & COMMITMENT TO ETHICAL PRINCIPLES necessary to
perform its engagements
184.108.40.206.1.1 The firm is responsible for the ongoing excellence of its staff, through continuing professional
development, education, work experience & coaching by more experienced staff.
220.127.116.11 ASSIGNMENT OF ENGAGEMENT TEAMS
18.104.22.168.1 The firm should have policies and procedures in place to ensure that:-
22.214.171.124.1.1 1) Key members of client staff & those charged with
governance are aware of the identity of the audit
126.96.36.199.1.1.1 2) The engagement partner has appropriate capabilities, competence, authority & time to perform their role
188.8.131.52.184.108.40.206 3) The engagement partner is aware of his responsibilities as engagement partner.
220.127.116.11.18.104.22.168.1 The engagement partner should ensure that he assigns staff of sufficient capabilities, competence & time to individual assignments so that
he will be able to issue an appropriate report
22.214.171.124 ENGAGEMENT PERFORMANCE
126.96.36.199.1 Firms often produce a MANUAL OF STANDARD ENGAGEMENT PROCEDURES to give to all staff
so that they know the standards they are working towards
188.8.131.52.1.1 Ensuring good engagement performance involves a number of issues:-
184.108.40.206.1.1.5 Resolution of disputes
220.127.116.11.1.2 When there are differences of opinion on an engagement team, a report
should not be issued until the dispute has been resolved.
18.104.22.168.1.2.1 The firm must also have standards as to what constitutes a suitable quality control review.
22.214.171.124.126.96.36.199 PEER REVIEW:- Review of an audit file carried
out by another partner in the assurance firm.
188.8.131.52.184.108.40.206 HOT REVIEW:- A peer review carried out before the audit report is signed.
220.127.116.11.18.104.22.168 COLD REVIEW:- A peer review carried out after the audit report is signed.
22.214.171.124.1 Firms must have policies in place to ensure that their quality control procedures are:-
126.96.36.199.1.3 Operating effectively
188.8.131.52.1.4 Complied with
184.108.40.206.1.5 They must monitor their system of quality control. Should be reported on to the management of the firm on an annual basis
220.127.116.11.1.5.1 ONGOING EVALUATION of the system of quality control.
18.104.22.168.1.5.2 PERIODIC INSPECTION of a selection of completed engagements.
22.214.171.124.1.5.3 Evaluate the effect of any DEFICIENCIES found.
126.96.36.199.188.8.131.52 More concerned with SYSTEMATIC or REPETITIVE deficiencies that require corrective action
3 ISA 220 QUALITY CONTROL FOR AN AUDIT OF FINANCIAL STATEMENTS
3.1 The objective of the auditor is to implement quality control procedures at the engagement
level that provide the auditor with reasonable assurance that:-
3.1.1 1) The audit complies with
professional standards and applicable
legal & regulatory requirements
3.1.2 2) The auditor's report issued is appropriate in
3.2 LEADERSHIP RESPONSIBILITIES
3.2.1 The engagement partner is required to set an example with regard
to the importance of quality
184.108.40.206 ETHICAL REQUIREMENTS
220.127.116.11.1 The engagement partner shall remain alert, through observation and making enquiries as necessary, for
evidence of non-compliance with relevant ethical requirements by members of the engagement team.
18.104.22.168.1.1 The engagement partner shall form a conclusion on compliance with independence requirements that
apply to the audit engagement.
22.214.171.124.1.1.1 The auditor shall include in the audit documentation conclusions on compliance with independence requirements that apply to the audit
engagement, and any relevant discussions with the firm that support these conclusions
126.96.36.199.188.8.131.52 The partner is required to ensure that the requirements of ISQC1 in respect of accepting and continuing with the audit are followed.
184.108.40.206.220.127.116.11.1 He must document conclusions reached about accepting and continuing the audit.
18.104.22.168.22.214.171.124.1.1 He must ensure that the team is appropriately qualified and experienced as a unit
126.96.36.199.188.8.131.52.1.1.1 He is required by other auditing standards to hold a meeting with the audit
team to discuss the audit, and the risks associated with the audit.
184.108.40.206.220.127.116.11.18.104.22.168 The audit is supervised overall by the engagement partner, but more practical supervision is given within the audit team.
22.214.171.124.126.96.36.199.188.8.131.52.1 Before the audit report is issued, the engagement partner must be sure that sufficient & appropriate audit
evidence has been obtained to support the audit opinion.
184.108.40.206.220.127.116.11.18.104.22.168.1.1 The partner need not review all audit documentation but may do so, he should review critical
areas of judgement, significant risks and other important matters
22.214.171.124.126.96.36.199.188.8.131.52.1.1.1 The partner is also responsible for ensuring that if difficult or contentious matters arise the team
takes appropriate consultation on the matter and that such matters & conclusions are properly
184.108.40.206.220.127.116.11.18.104.22.168.22.214.171.124 The engagement partner is responsible for appointing a reviewer if one is required.
126.96.36.199.188.8.131.52.184.108.40.206.220.127.116.11.1 Responsible for discussing significant matters arising with the reviewer and for not
issuing the audit report until the quality control review has been completed.
18.104.22.168.22.214.171.124.126.96.36.199.188.8.131.52.1.1 Required to consider the results of monitoring of the firm's quality control systems &
consider whether they have any impact on the specific audit he is conducting.