Auditing Standard ASQM1 is the Australian equivalent of ISQM 1 Quality Management for Firms that Performs Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements and will replace the current ASQC 1. The standard requires all firms engaging in audit and assurance services to design, implement and operate robust quality management systems and procedures.

Affected accounting firms will face an entirely new approach in terms of quality and risk management. The new auditing standard introduces a quality management approach that focuses on proactively identifying and responding to risks that may have an impact on engagement quality.

As mentioned by ASF Audits head of education Shelley Banton, the new standard requires firms to “tailor it [the quality management approach] to the firm’s experience, the firm’s size, and the risks that we identify and assess from that firm’s perspective, to make sure that we’re seeing audit quality at the forefront of what we’re undertaking.”

Under the standard, firms will need to undertake risk assessments in areas such as governance and leadership, information and communication, ethics, engagements, performance and resources.

ASQM1 addresses the following eight components:

• The firm’s risk assessment process
• Governance and leadership
• Relevant ethical requirements
• Acceptance and continuance of client relationships and specific engagements
• Engagement performance
• Resources
• Information and communication
• The monitoring and remediation process

All accounting firms engaging in audit and assurance services will need to do a full review of their quality control systems. Documenting and reviewing your systems and processes can take a fair bit of time so it’s highly advised that you get started as soon as possible.

Instead of doing it all yourself, we can do it for you and free up time you can use to do chargeable work. Our solutions include...

• Providing expert independent advice to help you improve areas of your accounting public practice, before it is scrutinised in a quality review
• Preparing compliant APES 320, ASQM1 and APES 325 manuals
• Significantly increase your chances of being a compliant practice - Ensuring your quality control system meets the mandatory standards
• Eliminating the need for a full-time or part-time employee to oversee your practice’s quality control system

Craig Allen is a former quality assurance reviewer for CPA Australia and has helped more than 500 practices in Australia as a quality assurance consultant or quality assurance reviewer. Craig has a unique perspective, having also been in public practice for more than 30 years. Talk to Craig to find out how he can help your accounting practice get ready for a quality review and attain best-practice standards.