As of December 15, 2025, firms with accounting and auditing practices were required to have a new system of quality management (QM) up and running. Statement on Quality Management Standards (SQMS) No. 1, which superseded Statement on Quality Control Standards No. 8, set new expectations for how firms address quality considerations. These tips can help small firms as they begin managing their QM systems more effectively.
Tip 1: Move into monitoring mode
While the work of preparing to implement the standard may be complete, it will still be necessary to monitor how well the QM system is functioning and to remediate any problems. Once a firm has completed its initial test of design and implementation, the key is to document everything, track any gaps, and assign responsibilities for remediation. To do this, small firms should:
Prioritize issues by risk.
Assign accountability.
Create a follow-up plan.
Keep records.
This can enable firms to identify lapses in system design or implementation and respond accordingly, as well as maintain proper oversight of their system.
Tip 2: Be proactive
The guidance requires firms to shift from a prescriptive model to a risk-focused, objective-driven framework. Instead of using a “check-the-box” approach, firms need to think about the risks they actually face and align controls to mitigate them. This means focusing on what matters most to your clients and your firm’s operations. It also involves linking each process or control to a clear objective (ensuring accurate financial reporting, compliance with independence, etc.). As a result, you prioritize efforts that will have real impact. You also enhance your QM system by making it more practical, sustainable, and aligned with your firm’s unique risks.
Tip 3: Identify root causes
The new standards ask firms to perform a root cause analysis to spot the underlying problems in the QM system. The process is about understanding why a problem happened so that it doesn’t recur, not just fixing it. The best approach is pretty simple: Ask “why” repeatedly until you identify the underlying process or control that failed. Then you can document your findings and use them to improve procedures or policies.
Tip 4: Be aware of challenges for sole practitioners
The QM practice aids note some considerations for sole practitioners, including:
Addressing a lack of segregation of duties when one person oversees all components of the system. This type of oversight is common for sole practitioners, but it’s possible to mitigate risks through alternate controls. For example, use checklists or automated alerts to help monitor the work performed. Another option is using independent consultants (colleagues, peer reviewers, etc.) for key judgments. Lastly, rotate responsibilities, where possible, to reduce risks and the margin of error.
Fulfilling ethical requirements through what the practice aid refers to as “self-governance, documentation, and independent consultation, with fewer formal procedures but equal responsibility.” This requires being deliberate, documenting decisions, and seeking guidance when needed. For example, if you are the only person reviewing tax returns, document your review process, note the use of any technical advisers, and keep a log of issues resolved.
Understanding other risk areas that may affect a sole practitioner or a small firm. Examples include:
Concentration risk. The firm may have an overreliance on key clients.
Cybersecurity. Smaller firms may have fewer resources to monitor and address IT risks.
Staff turnover. In a small firm, losing just one staff member can have a big impact.
Time pressures. Balance client work with QM responsibilities.
Tip 5: Tap into dedicated resources
Use AICPA resources, templates, and technology to simplify and expedite the process. Keeping the process simple and realistic can help firms avoid unnecessary complexity.
Even though small firms and sole practitioners have now implemented the QM standard, many still have a lot of questions about their QM process. My advice is to keep it practical and sustainable, rather than burdensome. Remember that regular reviews, even with a brief monthly check-in, can help identify issues before they escalate. Be sure to engage with your network to help validate your approach and gain insight into what has worked for others. Lastly, documenting your efforts demonstrates a firm’s commitment to quality and compliance.
Valuable QM resources
Practitioners have access to a wealth of AICPA resources on quality management standards, many of which include information specifically for sole practitioners and small- and medium-sized firms.
A Journey to Quality Management, on the QM hub web page, includes FAQs, articles, archived learning programs, and peer review information, as well as the standards and summary documents.
Three new webcasts (plus one on peer review readiness to be announced in the second quarter):
These practice aids are included in AICPA membership:
The Monitoring and Remediation Process for a Firm’s System of Quality Management provides an overview of the post-implementation requirement of SQMS No. 1 to perform monitoring and remediation procedures over the established system. It covers the requirements and practical guidance, with specific discussion for firms of all sizes, including small firms and sole practitioners. Firms will now be mainly focusing on this practice aid as they address post-implementation considerations.
Establishing and Maintaining a System of Quality Management for a CPA Firm’s Accounting and Auditing Practice includes a related template and library of objectives, risks, and responses. It includes considerations for both small- and medium-sized firms and sole practitioners. It is meant to be used with the AICPA “Example Risk Assessment” Excel template, which provides a starting point for assessing quality risks and responses for each quality objective component.
Information on common questions related to QM and peer review provides clarifications in key areas.
Stephanie Otero, CPA, is the Association’s Vice President — Small Firm Advocate.
Have questions for Stephanie? Contact her directly at stephanie.otero@aicpa-cima.com. Currently, Stephanie hosts two valuable webcasts: Small Firm Updates, which provides a general overview of the current financial climate for firms, and the new Small Firm Issues series, which examines hot topics like CPA Firm Top Issues, MAP Survey information, and key recent events. CPE is available for Small Firm Issues webcasts; AICPA members receive a discount, with an additional 20% off for PCPS members.
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