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Quality Management [ED]

Comment period ends:

The IAASB’s comment period ends on July 1, 2019.
The AASB’s comment period ends on June 7, 2019.

Next steps:

The IAASB will continue to discuss the proposed revisions to the quality management standards in the light of comments received on the Exposure Drafts with its Task Forces at its December 2019 meeting

Last up­dated:

September 2019

 

Overview

In February 2019, the International Auditing and Assurance Standards Board (IAASB) released several Exposure Drafts that propose to bring important changes to the way professional accountancy firms are expected to manage quality—for audits, reviews, and other assurance and related services engagements.

They consist of:

The proposed standards include a new proactive risk-based approach to effective quality management systems within firms that establish the foundation for consistent engagement quality. The new approach improves the scalability of the standards because it promotes a system tailored to the nature and circumstances of the firm and its engagements.

As set out in the Overall Explanatory Memorandum, The IAASB’s Exposure Drafts for Quality Management at the Firm and Engagement Level, Including Engagement Quality Reviews, the IAASB’s proposals are intended to improve engagement quality through:

  • Modernizing the standards for an evolving and increasingly complex environment, including addressing the impact of technology, networks, and use of external service providers;
  • Increasing firm leadership responsibilities and accountability, and improving firm governance;
  • More rigorous monitoring of quality management systems and remediating deficiencies;
  • Enhancing the engagement partner’s responsibility for audit engagement leadership and audit quality; and
  • Addressing the robustness of engagement quality reviews, including engagement selection, documentation, and performance.

Given the significance of the changes and the need for firms to adjust how they manage quality, the IAASB has also developed draft guidance and tools, such as examples and frequently asked questions. These materials will help firms understand the proposals, including how to apply them in different circumstances.

The AASB expects to adopt these IAASB standards with appropriate Canadian amendments, if any.

For further details refer to the relevant projects on the IAASB’s website, namely:

There is also a corresponding project on the AASB’s website, namely:

Other developments

April 2019

On April 5, 2019, the AASB issued an Exposure Draft proposing the adoption of ISQM 1, ISQM 2 and ISA 220 (Revised), with appropriate Canadian amendments, if any. Comments are requested by June 7, 2019.

February 2019

On February 8, 2019, the IAASB issued for comment several Exposure Drafts that propose to bring important changes to the way professional accountancy firms are expected to manage quality—for audits, reviews, and other assurance and related services engagements. Comments are requested by July 1, 2019.

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