Chapter 4 - Quality Contol Flashcards
Quality control is based on a number of procedures such as
Strong and ethical leadership and ethical behaviour by all employees
Only suitable clients and engagements accepted and retained
A firm and employees have the necessary knowledge, skills, competence and experience
Firm and employees follow proper working practices
Effective communication during engagements
Professional scepticism and judgement
Continuous improvement through monitoring
What are the six building blocks of quality control?
Leadership Engagement performance Ethics Human resources Client relationships Monitoring
Leadership means
Performing work that complies with standards and requirements
Issuing reports appropriate in the circumstances
Management assume responsibility for quality control by: establishing procedures for performance evaluation, compensation and promotion,
assignment of responsibility so commercial consideration does not override quality
provision of resources sufficient for development and documentation of control procedures
Human resources is
Recruit the right people, develop them to their full potential and reward them
Engagement performance
Matters relevant to consistency in quality of engagement
Supervision responsibility
Review responsibility
How to get consistency in quality of engagement performance?
Through policies and procedures.
Accomplished through written manuals, software tools and standardised documentation
Supervision responsibilities include
Tracking the progress of engagements
Considering the competence and capabilities of team members
Addressing significant matters that arise during engagement
Identifying matters for consultation
Review responsibilities
Reviewing work of less experienced team members to identify whether work has been properly performed, concluded, documented and that evidence is sufficient and appropriate to achieve objectives of engagement
What are hot review and cold reviews
Hot reviews are done before the audit report is finalised and the objective is to enhance quality of assurance work to reduce audit risk. Review is carried out by an independent partner or senior manager.
Cold reviews are performed after an engagement has been completed by a dedicated compliance or quality control team to monitor whether policies and procedures were effectively put into place. A report will be provided to partners to flag deficiencies and where there may be additional training required.
Documentation
Auditors required to document issues with respect to ethical considerations,
conclusions on compliance and and independence requirements
Conclusions regarding acceptance and continuance of engagements
Nature, scope and conclusions resulting from consultations undertaken during course of audit
Engagement quality reviewer should document that engagement quality review has been completed and the reviews is unaware of any unresolved matters
