Auditors staying focused on quality management
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Auditors staying focused on quality management

Jun 09, 2022 · 2 min read

When you buy anything from a desk chair to a sweater to a lawn mower, you’ll find somewhere inside the packaging a sticker or scrap of paper noting that an employee who performs some sort of quality control inspected it.

Exactly what that employee did to inspect that item is unclear. But it’s intended to give you, the consumer, confidence that attention was paid to the item’s quality.

Although no similarly tangible sign accompanies the work provided by auditors, great transparency exists concerning how quality is monitored in the audit profession. A rigorous system of CPA firm quality management serves as the foundation for high quality in the profession.

To make those firm-based systems more effective, the AICPA Auditing Standards Board (ASB) this month issued a new quality management standard that firms are required to follow that will take effect Dec. 15, 2025.

CPAs already work under several checks and balances that contribute to high quality. They possess highly regarded professional expertise shaped by passing the CPA Exam and reinforced through continuing professional education and licensing requirements. Meanwhile, a carefully administered peer review program helps confirm the quality of firms’ systems and work.

The new quality management standard further sharpens the focus on firms’ self-administered internal quality control processes. It is designed to move quality management systems away from using standard checklists that were designed to apply to many firms. Instead, the standard requires firms to evaluate their specific risks to deliver a high-quality audit and act to mitigate those risks. Those risks may change over time, and they may need to be addressed accordingly.

For example, a firm that takes on a new type of highly specialized audit — such as a single audit or an employee benefit plan audit — would face new risks and would need to address those risks accordingly, presumably by acquiring or developing the expertise to perform the new work with high quality.

A firm with vast experience in such specialized audits would have less risk associated with those engagements and therefore would act differently to promote quality in those audits. But if that experienced firm suddenly lost some of its top people in the single audit or employee benefit plan audit practice, its risks would change again related to quality management.

The standard adds a requirement for firms that use resources — such as specialists from the areas of tax, valuation or IT consulting in their audits — to hold those resources to the same standards of quality that apply to the core auditors on an engagement.

To enable consistency with audits conducted around the world, the standard also has been converged with those the International Auditing and Assurance Standards Board already issued.

In some cases, this standard won’t be easy for CPA firms to implement. It requires a thorough, thoughtful analysis and documentation of firm quality management practices that will take time and resources to complete. This is why the ASB created a long implementation period by making the effective date Dec. 15, 2025. This allows firms to start now by developing a plan and then implement the standard over the next 3½ years.

The result should be higher quality in the services that auditors provide, as their quality management systems will be realigned to address their specific risks. It’s just another example of how the profession serves the public interest through standard setting.

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