I S Q C 1 Implementation for

Small & Medium Practices

Charles A EganConsultant / Head Reviewer

Quality Assurance Monitoring ICAG

Agenda

ISQC 1

Objective

Elements of a System of Quality Control

Documentation of the System of Quality Control

Pulling it together

International Standard on Quality Control 1 (redrafted)

• This ISQC applies to all firms of professional accountants in respect of audits and reviews of financial statements, and other assurance and related services engagements.

• The nature and extent of the policies and procedures developed by an individual firm to comply with this ISQC will depend on factors such as the size and operating characteristics of the firm, and whether it is part of a network or not. ( Para 4)

Quality Control for firms that perform audits and reviews of financial statements and other assurance and related services engagements (para 1)

Objective

• (a) The firm and its personnel comply with professional standards and regulatory and legal requirements; and

• (b) Reports issued by the firm or engagement partners are appropriate in the circumstances.

NB// This ISQC does not call for compliance with requirements that are not relevant. (see A1) External qualified person or another firm may be considered

The objective of the firm is to establish and maintain a system of quality control to provide it with reasonable assurance that: (Para 11)

Elements of a system of Quality Control (paras 16-17)

• Leadership responsibilities for quality within the firm (18-19)• Relevant ethical requirements (20-25)•Acceptance and continuance of client relationships and specific engagements (26-28)•Human resources (29-31)•Engagement performance (32-47)• Monitoring (48-56)

The firm shall document its Policies and procedures and communicate them to the firm’s personnel.

Documentation of the System of Quality Control (Paras 57 -59)

The firm shall establish policies and procedures:

• requiring appropriate documentation to provide evidence of the operation of each element of its system of quality control. (para 57)

• that require retention of documentation for a period of time sufficient to permit those performing monitoring procedures to evaluate the firm's compliance with its system of quality control, or for a longer period if required by law or regulation. (para 58)

• documentation of complaints and allegations and the responses to them. (para 59)

• ISQC 1 Checklist

• Risk and Control Schedule

Documentation of the System of Quality Control (Paras 57 -59) cont’d

Pulling them together

• Documentation• Testing (design & operating effectiveness)• Remediation plan

Difficulties encountered• Grossly underestimated time

commitments • Availability of relevant individuals• Challenges of wearing so many hats• Resource constraints

Thank You

Questions?

Comments?