Dear Colleagues,
The International Auditing and Assurance Standards Board (IAASB) released its three quality management standards on 17 December 2020. The standards promote a robust, proactive, scalable and effective approach to quality management and mark a significant evolution of the existing quality control standards.
The suite of standards includes:
(1) International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements;
(2) ISQM 2, Engagement Quality Reviews; and
(3) International Standard on Auditing 220 (Revised), Quality Management for an Audit of Financial Statements.
Three new and revised standards strengthen and modernize the audit firm’s approach to quality management. Through the standards, the IAASB is addressing an evolving and increasingly complex audit ecosystem, including growing stakeholder expectations and a need for quality management systems that are proactive and adaptable.
The standards direct audit firms to improve the robustness of their monitoring and remediation, embed quality into their corporate culture and the “tone at the top”, and improve the robustness of engagement quality reviews.
The standards are effective from December 15, 2022. They replace the IAASB’s current standards, International Standard on Quality Control 1 and International Standard on Auditing 220.
The IAASB has also developed Bases for Conclusions and factsheets to support the implementation of the new standards, which are available on the IAASB’s website:
http://www.iaasb.org/focus-areas/quality-management
