These standards indicate the importance of firm governance and leadership, with quality embedded in the fabric of the firm's culture, strategic and operational decisions, and leadership's actions and behavior.
ISQMs aim at enhancing quality management systems and reporting. That is in addition to monitoring process and setting out the procedures to respond to deficiencies in corporations.
The standards also drive more robust and effective monitoring and remediation. At the engagement level, they increase the responsibility of engagement partners for managing and achieving audit quality, in addition to bolstering who can perform engagement quality reviews and how the reviews are performed.
To support implementation and help Small- and Medium-sized Practices (SMPs) understand, move, and apply the revised standards, the International Federation of Accountants (IFAC) in collaboration with the Forum of Firms (FOF) held two digital panel discussions. These focused on providing an overview of the International Standard on Quality Management 1 and 2, how firms are planning its implementation, and sharing practical examples, tips, and suggested good practices.
ISQM 1
“ Quality Management for Firms that Perform Audits or Reviews of Financial Statement or Other Assurance or Related Services Engagements “
ISQM 1 deals with the firm’s responsibility to design, implement and operate a system of quality management (SOQM) for audits or reviewing financial statements. The SOQM is the mechanism that creates an environment that enables and supports engagement teams in performing quality engagements. It helps the firm achieve consistent engagement quality because it is focused on how the firm manages the quality of engagements performed.
ISQM 2
International Standard on Quality Management (ISQM 2), Engagement Quality Reviews
ISQM 2 deals with the appointment and eligibility of the engagement quality reviewer, and the engagement quality reviewer’s responsibilities relating to the performance and documentation of an engagement quality review. ISQM 2 applies to all engagements for which an engagement quality review is required to be performed with ISQM 1.