CA ANZ has launched an audit quality toolkit to help practices achieve compliance with the revised standards that apply from mid-December.
The toolkit contained illustrative risk assessments and pro-forma documentation so that small-to-medium audit firms could implement the changes in ASQM1, said assurance and reporting leader Amir Ghandar.
The toolkit is being launched today (19 May) on CA ANZ’s live-streamed Accounting and Audit Conference.
“The new quality management standards are significant and involve a far more nuanced approach according to each respective firm,” Mr Ghandar said.
“Quality management standards have evolved from being a compliance-based, one-size-fits-all approach to a scalable, risk-based approach which integrates quality management practices.
“ASQM1 reflects the shift to that risk-based approach.”
Mr Ghandar said members were aware that the new standards reflected the nature, size and complexity of firms and required an understanding of how they applied specifically to each practice.
The toolkit aimed to give firms a head start.
“We’ve put together a library of the kinds of risks that you would expect to find in small and medium practices,” he said.
“That will probably fill out 80 per cent of what they need. They can then go above and beyond that, thinking about where the unique risks are in their firm, and how can they put in place a response.”
He said an example of the tailored approach involved the standard concerning governance and leadership of audit quality.
“Governance and leadership is going to be very different in a large context compared to a medium-sized firm that has a few partners and staff, and then very different again in a sole practitioner firm,” he said.
“Some examples of risks associated with governance and leadership include that quality management responsibilities are not allocated to the appropriate leader or personnel. Firms need to have a clear assignment of responsibility around quality control.”
For a sole practitioner, they would be taking full responsibility for quality management and straightforward documentation would cover it.
“A medium-sized firm with staff will need to have a little bit more – a clear policy that shows who is responsible for audit quality and some procedures around actually achieving that,” he said.
“A large firm with thousands of staff will have a much more comprehensive need to have an assignment of different personnel and leaders who have different rolls in regards to quality management.”
He said the toolkit had taken six months to develop and had involved extensive consultation with members and international peers. But it was straightforward to use and “deliberately low-tech”.
“We’re not trying to create a situation where we have to train people on a new piece of technology,” he said.
He said the new standards were critical to maintaining trust in the audit profession.
“These changes to quality management standards take that trust a step further, building more confidence in the auditing profession and across the broader industry,” he said.
The toolkit is available on CA ANZ’s Quality Management Hub. Firms need to comply with the new standards by 15 December 2022.