Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Quality Control Guide Orientation Slides


Published on

An orientation slide deck on the IFAC SMP Committee's Guide to Quality Control for SMPs (QC Guide) that member bodies may use in training and orientation seminars to introduce staff and members to the QC Guide.

Published in: Business, Technology
  • Can you earn $7000 a month from home? Are you feeling trapped by your life? Stuck in a dead-end job you hate, but too scared to call it quits, because after all, the rent's due on the first of the month, right? Are you ready to change your life for the better? ●●●
    Are you sure you want to  Yes  No
    Your message goes here
  • MADE $30 ON MY FIRST DAY! Being a fresh graduate and having lots of free time, I stumbled upon your site when I was searching for work at home opportunities, good thing I did! Just on my first day of joining I already made $30! Now I'm averaging close to $80 a day just for filling out surveys! 
    Are you sure you want to  Yes  No
    Your message goes here
  • D0WNL0AD FULL ▶ ▶ ▶ ▶ ◀ ◀ ◀ ◀
    Are you sure you want to  Yes  No
    Your message goes here
  • Tackle Odds With Lottery Secrets ♣♣♣
    Are you sure you want to  Yes  No
    Your message goes here
  • USA Today Has Proof That Lotto Is NOT Random ■■■
    Are you sure you want to  Yes  No
    Your message goes here

Quality Control Guide Orientation Slides

  1. 1. QC Guide—OrientationIFAC SMP CommitteeAn Introduction to the Guide toQuality Control for Small- andMedium-Sized PracticesApril 2012
  2. 2. QC Guide—OrientationContents• International Standard on Quality Control (ISQC) 1• The QC Guide – Structure and Content – Chapters – Appendices – Sample Manuals• IFAC Resources
  3. 3. International Standard on Quality Control (ISQC) 1• ISQC 1, paragraph 11 – The objective of the firm is to establish and maintain a system of quality control to provide it with reasonable assurance that: • The firm and its personnel comply with professional standards and applicable legal and regulatory requirements; and • Reports issued by the firm or engagement partners are appropriate in the circumstances.• Applying ISQC 1 proportionately to the size and complexity of the firm is key to its efficient implementation
  4. 4. The QC Guide Published August 2011
  5. 5. The QC Guide• Helps SMPs apply ISQC 1 proportionately and efficiently• Provides practical guidance, but is no substitute for: – Reading and understanding ISQC 1 (itself, a requirement of ISQC 1) – Using professional judgment• Helps firms develop a system of quality control• Promotes consistent application of quality control requirements within audit, review, and other assurance and related service engagements• May serve as a reference document for training within a firm
  6. 6. QC Guide Structure and Content
  7. 7. QC GuideStructure and Content• Modular approach to the elements of ISQC 1 – Chapter 1: Leadership Responsibilities for Quality Within the Firm – Chapter 2: Relevant Ethical Requirements – Chapter 3: Acceptance and Continuance of Client Relationships and Specific Engagements – Chapter 4: Human Resources – Chapter 5: Engagement Performance – Chapter 6: Monitoring – Chapter 7: Documentation• ―Helpful Hints‖
  8. 8. QC GuideStructure and Content• Case study—M.M. and Associates – Fictional sole practitioner employing four staff – Performs review engagements and a small number of audits – Illustrates the value of a system of quality control and how its elements may be applied to practical situations• Sample forms and checklists• Two sample Quality Control Manuals – Sole practitioner – 2-5 partner firm
  9. 9. QC Guide Chapters
  10. 10. Chapter 1Leadership Responsibilities for Quality Within Firm • The Leadership Responsibility Pyramid
  11. 11. Chapter 1Leadership Responsibilities for Quality Within Firm • Develop a culture of quality from top down • Ultimate responsibility is with the firm’s managing board • Underpinned by partner commitment to the firm’s quality control policies and procedures • Operational responsibilities for elements of the QC system assigned to those with: – Sufficient and appropriate experience; and – The necessary authority • Commercial considerations should not override management responsibilities for quality (for example, in performance evaluations, setting compensation, etc.)
  12. 12. Chapter 2Relevant Ethical Requirements • Embed within the firm the fundamental principles of professional ethics: – Integrity – Objectivity – Professional competence and due care – Confidentiality – Professional behavior • Establish processes to identify and deal with non- adherence to the fundamental principles
  13. 13. Chapter 2Relevant Ethical Requirements • Independence—required on all assurance engagements • Understand the threats and safeguards to independence, set out in the IESBA Code of Ethics • Maintain policies and procedures to enable threats to independence to be identified, documented, and managed appropriately, including: – Firm level—annual written confirmations from all partners and professional staff – Engagement level—written confirmation by engagement team • Identify and manage conflicts of interest • Establish confidentiality procedures
  14. 14. Chapter 3Acceptance and Continuance of ClientRelationships and Specific Engagements
  15. 15. Chapter 3Acceptance and Continuance of ClientRelationships and Specific Engagements • Ensure the firm has the competence and capability, can comply with ethical requirements, and considers the client’s integrity when deciding to accept or continue the engagement … and document risks and (any) safeguards • Withdrawal from engagements and/or client relationships … and document underlying factors
  16. 16. Chapter 4Human Resources
  17. 17. Chapter 4Human Resources • Need sufficient personnel in the firm with the competence, capabilities, and commitment to ethical principles necessary to do the work • Focus on recruitment and retention relative to the needs of the firm and its clients • Ensure that staff and partners are appropriately trained and developed and that their competence is maintained • Assign engagement teams with the necessary competence and capabilities to do the work • Establish a disciplinary process
  18. 18. Chapter 5Engagement Performance • Policies and procedures should ensure consistent quality output across the firm • Engagement partner has defined responsibilities • Establish: – Effective planning, supervision, and review procedures – Consultation procedures—when, who, how, etc.—including external sources if necessary – Procedures for resolving differences of opinion
  19. 19. Chapter 5Engagement Performance • Engagement quality control reviews (EQCR) – Required for all audits of listed entities – Establish criteria for other engagements where EQCR would be desirable (e.g., high risk) – Defined minimum scope • Appoint suitable EQCR reviewer—internal or external – Technically capable – Necessary experience and authority – Objective
  20. 20. Chapter 6Monitoring • Establish a monitoring program over the firm’s system of quality control • Inspection procedures: – Consider nature and extent, but ensure coverage of at least one engagement per partner at least every 3 years – External inspections may be desirable (e.g., fresh perspective or sharing of ideas) or necessary (if no suitable internal resource) – Formal reporting • Communicate deficiencies and take remedial actions • Establish procedures for dealing with complaints and allegations
  21. 21. Chapter 7Documentation • Required of: – The firm’s quality control policies and procedures – Engagement files – Engagement quality control reviews • File access and retention
  22. 22. QC Guide Appendices
  23. 23. QC GuideAppendices (extracts)
  24. 24. QC GuideUsing the Appendices• Eight appendices, each of which may serve as a practice aid for firms to use within their quality control systems• May be adapted as appropriate, for example, to conform with: – Regulatory and professional requirements in the applicable jurisdiction; and – The policies and procedures of the firm
  25. 25. QC Guide Sample Manuals
  26. 26. QC GuideSample Manuals
  27. 27. QC GuideUsing the Sample Manuals• Determine the leadership positions that apply, or ought to apply, within the firm, for example: – Managing Partner – Ethics Leader – Human Resources• Assign responsibility for all key, relevant quality control functions, ensuring those assigned have sufficient and appropriate experience, ability, and authority to carry out such responsibilities.• Select from policies (where presented) or modify the policies as appropriate.
  28. 28. QC GuideUsing the Sample Manuals• Ensure engagement templates are updated to reflect the policies in the manual.• Ensure agreement by all partners (if a partnership).• Present the manual to all partners and staff, preferably in a seminar environment.• Provide the manual to new staff and perform a follow-up interview to ensure it has been read and understood.• Review and update the manual as new standards or new firm policies are developed (suggested annually).
  29. 29. IFAC Resources
  30. 30. SMP Committee Home Access QC Guide and Implementation Resources from here
  31. 31. IFAC Resources• Guide to Quality Control for Small- and Medium-Sized Practices – medium-sized-practices-third-edition-0• For ISQC 1, clarified ISAs, and related implementation resources, see IAASB Clarity Center: –• Tips for Cost-Effective ISQC 1 Application article –
  32. 32. IFAC Resources• Good practice guidance paper, Client Acceptance and Continuance –• Policy Position Paper 2, Promoting a Single Set of Auditing Standards for All Audits, Including of Small- and Medium-Sized Entities – small-and-medium-sized-entities• Links to other implementation resources –
  33. 33. Copyright © April 2012 by the International Federation of Accountants (IFAC). Allrights reserved. Used with permission of IFAC. Contact permissions@ifac.orgfor permission to reproduce, store, or transmit this document.