This International Auditing Standard (ISA) deals with the auditor's responsibilities regarding quality control procedures for an audit of financial statements. It also addresses, when applicable, the responsibilities of the work quality control reviewer. This ISA must be read in conjunction with the relevant ethical requirements.
The quality control system
Quality control systems, policies and procedures are the responsibility of the audit firm. In accordance with IASC 1, the firm has the obligation to establish and maintain a quality control system that provides reasonable assurance that:
- The firm and its staff comply with professional standards and with the applicable legal and regulatory requirements; and Opinions issued by the firm or the business partners are appropriate in the circumstances.
a) Work partner. It is the partner or other person in the firm who is responsible for the audit work and its performance, and for the auditor's opinion that is issued on behalf of the firm, and who, when required, has the appropriate authority of a professional legal body or regulation.
b) Quality control review of the order. It is a process designed to provide an objective evaluation, on or before the date of the auditor's report, of the important judgments made by the engagement team and the conclusions reached to formulate the auditor's report. The work quality control review process is only for audits of financial statements of publicly listed entities and other audit work, if any, for which the firm has determined that a quality control review is required from work.
c) Work quality control reviewer. A partner, another firm person, external person with appropriate qualifications, or a team made up of these people, with sufficient experience and authority to evaluate in an objective way the important judgments made by the work team and the conclusions it reached to formulate the auditor's opinion.
d) Engagement team. All associates and assistant personnel performing the engagement, and any individuals hired by the firm or a network firm to perform audit procedures on the engagement. This excludes an external auditor expert hired by the firm or a network firm.
e) Signature. An independent professional, partnership or corporation, or other entity of professional accountants.
f) Inspection. In relation to completed audit engagements, procedures designed to provide evidence of engagement of engagement teams with the firm's quality control policies and procedures.
g) Publicly listed entity. An entity whose shares, securities or debt are listed or listed on a recognized stock exchange, or traded under the regulations of a recognized stock exchange or other equivalent body.
h) Follow-up. A process comprising continuous consideration and evaluation of the firm's quality control system, including periodic inspection of a selection of completed works, designed to provide the firm with reasonable assurance that its quality control system is operating in a manner effective.
i) Network signature. A firm or entity that belongs to a network.
j) Network. A larger structure:
(i) Whose objective is cooperation, and
(ii) Whose objective is clearly to share profits or cost or share common ownership, control or administration, common quality control policies and procedures, common business strategy, the use of a common brand name, or an important part of professional resources.
k) Partner. Any person with authority to link the firm regarding the performance of a professional services job.
l) Personal. Partners and assistant staff.
m) Professional standards. International Auditing Standards (NIA) and relevant ethical requirements.
n) Relevant ethical requirements. Ethical requirements to which the work team and the work quality control reviewer are subject, which ordinarily comprise Parts A and B of the Code of Ethics for Professional Accountants of the International Federation of Accountants (IFAC Code) related to a audit of financial statements along with more stringent national requirements.
o) Employees. Professionals, other than partners, including any experts employed by the firm.
p) External person with adequate qualifications. A person outside the firm with the competence and capabilities to act as a business partner, for example a partner in another firm, or an employee (with appropriate experience) of either a professional accounting body whose members can perform audits of historical financial information or an organization that provides relevant quality control services.
Responsibility for leadership in the quality of audits.
The engagement partner should assume responsibility for the overall quality of each audit engagement that partner is assigned (the essential quality in audit engagements).
Applicable ethics requirements
Throughout the audit, the engagement partner shall remain alert, through observation and with investigations when necessary, to evidence of noncompliance with relevant ethical requirements by members of the engagement team (integrity, objectivity, competence and diligence). professionals; confidentiality and professional behavior).
Independence
The engagement partner must form a conclusion about meeting the independence requirements that apply to the audit engagement.
Acceptance and continuity of customer relations and audit assignments
The partner will be satisfied that the appropriate procedures have been followed regarding the acceptance and continuation of client relationships and audit engagements, and must determine that the conclusions reached in this regard are appropriate.
Assignment of teams to orders
The engagement partner shall be satisfied that the engagement team, and any auditor's experts who are not part of the engagement team, together have the appropriate competence and capabilities to:
- Perform the audit work in accordance with professional standards and applicable legal and regulatory requirements; and Facilitate the issuance of an auditor's report that is appropriate in the circumstances.
Assignment of work teams…
Specific considerations for public sector entities
Al2. In the public sector, appropriate additional competence may include skills that are necessary to offload the terms of the audit mandate in a particular jurisdiction. This competence may include an understanding of applicable information agreements, including informing the legislature or other governing body or in the public interest. The broader scope of a public sector audit may include, for example, some aspects of performance auditing or a comprehensive assessment of compliance with law, regulation or other authority and preventing and detecting fraud and corruption.
Completion of orders (partner responsibility)
- Management, supervision and realization. Reviews. Consultations. Quality control review of the order. Differences of opinion.
Tracing. An effective quality control system includes a monitoring process designed to provide the firm with reasonable assurance that its quality control system policies and procedures are relevant, adequate, and operate effectively. The work partner shall consider the results of the firm's monitoring process based on evidence from the most recent information circulated by the firm and, if applicable, other firms in the network, and if the deficiencies noted in that information may affect to the audit work.
The auditor shall include in the audit documentation:
- Identified issues regarding compliance with relevant ethical requirements and how they were resolved. Conclusions on compliance with the independence requirements that apply to the audit engagement, and any relevant discussions with the firm that support these conclusions. Conclusions reached regarding acceptance and continuation of client relationships and audit engagements - The nature and scope and conclusions resulting from inquiries made during the course of the engagement engagement.
The work quality control reviewer shall document, for the revised audit work, that:
a) The procedures required by the firm's work quality control review policies have been carried out;
b) The work quality control review has been completed on or before the date of the auditor's report; and
c) The reviewer is not aware of any unresolved issues that could cause the reviewer to believe that the important judgments made by the engagement team and the conclusions it reached were inappropriate.
