Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements

Scope of ISQC 1

• Firm’s responsibilities for its system of quality control for audits and reviews of financial statements, and other assurance and related services engagements.

Authority of this ISQC “Para 5-1”

•  Applies to all firms of professional accountants in respect of audits and reviews of financial statements, and other assurance and related services engagements

Effective date of ISQC 1: 15 December 2009

Objective of ISQC 1 “Para 11”

To establish and maintain a system of quality control to provide with reasonable assurance that

1. The firm and its personnel comply with professional standards and applicable legal and regulatory requirements; and
2. Reports issued by the firm or engagement partners are appropriate in the circumstances.

Requirements of ISQC 1 “Para 13-59”

• Personnel responsible for establishing and maintaining the firm’s system of quality control shall have understanding of this ISQC 1.
• Comply with all requirement of this ISQC 1 unless not applicable.
• Additional requirement may need to be established in addition to ISQC 1 for fulfillment of objective of ISQC 1.

Elements of a System of Quality Control

1. Leadership Responsibilities for Quality within the Firm

• Firm’s chief executive officer (or equivalent) or, if appropriate, the firm’s managing board of partners (or equivalent) shall assume ultimate responsibility for the firm’s system of quality control.
• Firm’s chief executive officer or managing board of partners shall have sufficient and appropriate experience and ability, and the necessary authority, to assume that responsibility.
•  

2. Relevant Ethical Requirements

• Firm and its personnel shall comply with relevant ethical requirements.

Independence

• Firm shall communicate its independence requirements to its personnel and, where applicable, others subject to them.
• Identify and evaluate circumstances and relationships that create threats to independence, and to take appropriate action.
• Engagement partner shall provide information about the client and engagement to evaluate impact on independence requirement.
• Personnel shall promptly notify the firm of circumstances and relationships that create a threat to independence
• accumulation and communication of relevant information to appropriate personnel for satisfaction of independence requirement.
• Personnel shall promptly notify the firm of independence breaches of which they become aware.
• The firm to promptly communicate identified breaches to responsible engagement partner.
• Communicate the action taken to resolve the issue.