Why do we need new quality control standards? Well, there’s a lot more to regulations than them merely making life more complex for audit firms. Those firms that enjoy the most success across the board also tend to fulfil the highest standard-related requirements when it comes to their own internal and external activities, so any changes are set to bring a positive for all.Contents
ISQM 1 is an IAASB (International Auditing and Assurance Standards Board) initiative, replacing the ISQC 1, or the current International Standard on Quality Control. The new International Standards of Quality Management (ISQMs) are designed to fix inefficiencies in the current standards. More focus is placed on proactive responses to quality management issues.
ISQM 1 requires the firm to perform an evaluation of their system of quality management, at least annually.
Expanding the traditional quality management guidelines to include quality management addresses a traditionally complex process and should result in a greater standard of service for firms, their employees, and their clients.
Standards and expectations of standards change with the times – there’s even a growing number of digital audits being conducted these days, given the increase in accuracy combined with savings in time and money. In general, quality management governs the ways in which a business operates, be it managing its internal staff or selling products to external customers. Standards should regulate the quality of service provided in a multitude of areas, combined with ensuring firms are consistent in their approach.
It’s easy for businesses to dismiss the changes in quality management standards as being little more than an opportunity for regulators to create more work. However, a company that fulfils a high level of standards both internally and externally is likely to enjoy higher levels of employee and customer satisfaction, increase profit levels, reduce operational costs and compete on a level with bigger businesses.
Overall, the new quality management standards concern both quality and risk, requiring the following components:
● Risk assessment
● Monitoring and remediation
● Governance and leadership
● Relevant ethical requirements
● Acceptance and continuance of client relationships and specific engagements
● Engagement performance
● Resources
● Information and communication
Of the above eight components listed, risk assessment plus monitoring and remediation have been added to the six objectives detailed in the ISQC 1.
‘Risk assessment’ details the creation of quality objectives and addressing any potential risks that may hinder the realisation of these objectives. ‘Monitoring and remediation’ details a firm’s procedures for presenting evidence and areas that need improvement.
All eight components will be relevant to most businesses, regardless of size. However, when creating their own system of quality management, some firms may need to scale up, while others may find it appropriate to scale back.
What risks can be identified that may hinder the delivery of a quality objective? Firms need to consider all potential stumbling blocks, which may differ wildly from one company to the next, depending on industry, size and management structure.
Once they have established that a risk exists, firms need to establish a suitable response, which takes account of, for example, the impact and probability of the risk occurring. Don’t forget, digital audits can deliver a new client experience as well as improve effectiveness and efficiencies across the board – consider adopting Inflo technology to streamline your own audits and offer greater value and performance.
For more information, find out what is included in the new quality management standards.
No matter what stage your business is at when it comes to complying with the ISQM, Inflo software can save you time, money, and audit-era headaches.
Utilising digital technology, Inflo can provide your company with clearly mapped-out insights, quality objectives, risk assessment documentation, and real-time monitoring.
