System of Quality Control Flashcards
Purpose of Quality Controls
Obligation to establish and maintain a system of quality control to provide it with reasonable assurance that:
a. Firm and professional comply with professional standards and regulatory requirements
b. Reports issued by the firm are appropriate in the circumstances
Elements of Quality Control (HARLEM)
- Leadership Responsibilities
- Ethical Requirements
- Acceptance and continuance of client relationship and specific engagements
- Human Resources
- Engagement Performance
- Monitoring
Documentation of Quality Control
- Describe the quality control policies and procedures and the objectives they are designed to achieve
- It should include the message that each individual has a personal responsibility for quality and is expected to comply with these policies
- Recognize the importance of obtaining feedback on its quality control system for its personnel
Leadership Responsibilities for Quality within the Firm
Establish policies and procedures designed to promote an internal culture recognizing that quality is essential in performing engagements
Relevant Ethical Requirements
Firm should establish policies and procedures designed to provide it with reasonable assurance that the firm, its personnel, and other subject to independence requirements
Considerations when Accepting or Continuance of Client Relationships and Specific Engagements
- Considered the integrity of the client and does not have information that would lead to it to conclude that the client lacks integrity
- Competent to perform the engagements and has the capabilities
- Can comply with ethical requirements
Primary Considerations for Acceptance of Client Engagement
- Competence, Capabilities, and Resources
- Integrity of the Client
- Continuance of Client Relationship
- Withdrawal
Policies in Human Resources
- Recruitment
- Performance Evaluation
- Capabilities
- Competence
- Career Development
- Promotion
- Compensation
- The estimation of personnel needs
Ways to develop Capable and Competent personnel
- Professional Education
- Continuing professional development, including training
- Work experience
- Coaching by more experienced staff
Recruitment
Help in select individuals of integrity who have the capacity to develop the competence and capabilities necessary to perform firm’s work
Duties of Sueprvicsion
- Tracking progress of engagement
- Considering the capabilities and competence of individual members
- Addressing significant issues arising during the engagement
- Identifying matters for consultation by more experience engagement team members
Considerations for Review
- Whether work has been performed in accordance with professional standards
- Significant matters have been raised further
- Appropriate consultation have taken place and the resulting conclusions have been documents
Documentation of Consultation
Documentation of consultations that involve difficult or contentious matters that is sufficiently complete and detailed contributes to an understanding of
1. The issue on which the consultation sought; and
2. Results of the consultation
Requirements of Engagement Quality Control Review
- Require an engagement quality control review for all audits of financial statements of listed entities
- Set out criteria against which all other audits and review of historical information should be performed
- Require an engagement quality control review for all engagements meeting the criteria established in compliance with paragraph stated above
Purpose of Monitoring Compliance
Provide and evaluation of:
1. Adherence to professional standards and regulatory requirements
2. Whether the quality control system has been appropriately designed and implemented
3. Whether the firm’s quality control policies and procedures have been appropriately applied
