Days to prepare for ISQM:

ISQM

New standards for Quality Management in Auditing and Reviews of Financial Statements are coming.

In September 2020, two new International Standards on Quality Management, ISQM 1 and ISQM 2, together with a revised version of International Standard on Auditing 220 were approved. These will replace the current quality control standard (ISQC1) and the existing version of ISA 220. The new ISQMs are designed to create a more robust, proactive and effective system for quality management.

To help firms implement the ISQMs, Mercia's Quality Management Manual is now out.

ISQM Implementation Manual ▶

On this page:

Introduction to ISQMs

Following a series of high-profile audit failures, the International Auditing and Assurance Standards Board’s (IAASB) has updated the Quality Management standards.

The International Standards of Quality Management (ISQMs) are designed to fix inefficiencies in the current standards. More focus is placed on proactive responses to quality management issues. The impact of ISQMs mean that professional accountancy firms will need to change the way they handle quality management. In particular when it comes to audits, reviews, and other assurance and related services engagements.

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Helping you prepare for the new ISQM standards
David Norris talks about preparing for 15 December 2022 and how Mercia can help.

What are ISQMs?

ISQM stands for International Standard on Quality Management (ISQM). There are two ISQMs:

  • ISQM 1 - aims to enhance the robustness of a firm's quality management systems

  • ISQM 2deals with the appointment and eligibility of the engagement quality reviewer

These are supplemented by ISA 220 (Revised) - specifically for auditing firms, which handles the specific responsibilities of the auditor on an audit engagement.

The standards place greater responsibility on a firm’s leadership for continuously improving the quality of their engagements and taking remedial action when deficiencies are found. The standards should help ensure that a commitment to quality is at the heart of a firm’s strategy and operations.

 

 

ISQM Check

 

 

 

ISQM Countdown

 

When are ISQMs effective from?

The ISQMs were officially approved in September 2020 with the standards released in December 2020.

The three new standards will come into effect from the 15th December 2022.

Days until ISQM come into effect: 

To help your audit firm implement the ISQMs, Mercia has created an extensive Quality Management Manual. This tool highlights over 100 different potential Quality Management risks and responses for them.

Designed to suit any size firm, the Mercia Quality Management Manual makes preparing for ISQM easy.

ISQM Implementation - Quality Management Manual

Need help getting started with ISQMs? 

In order to help your firm be ready for ISQMs, Mercia has put together an extensive Quality Management Manual.

Access to over 100 potential risks all comprehensively catalogued. All risks are rated and include example risk mitigation procedures which your firm can put in to place.

Use the Quality Management Manual to get your firm ready in time for ISQM.

Out Now

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100+ Risks Catalogued

Over 100 potential quality risks which your firm could face. Each with recommended actions to reduce the risk which you can adapt for your firm.
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Easy-to-use

Choose between Excel Spreadsheet or PDF version. Risks are broken down into simple topic areas for ease of use.
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Suitable For All Firms

The Quality Management Manual identifies key risks regardless of whether you are a sole-practitioner or a large firm.

 

 

 

ISQM Mock-up

ISQMs: Key Questions

Our Auditing Experts answer key questions regarding the new ISQMs.

ISQM 1 replaces ISQC 1. Meanwhile, ISQM 2 is a brand new standard; but many elements have been relocated from other standards such as ISQC1 and ISA 220.

ISA 220 (Revised) is an updated version of the existing ISA 220 standards.

The ISQM applies to all firms performing audits, reviews of financial statements or other assurance or related services engagements.

Firms are advised to start preparing for ISQM as soon as possible.

Mercia have created a comprehensive Risk Assessment Tool to help you design effective policies that meet the new ISQM standards.

The Risk Assessment Tool includes over 100 possible quality management risks and effective methods to reduce any risks.

Mercia also has a range of training courses to help prepare for ISQM implementation.

ISQM is effective from the 15 December 2022.

To comply with ISQM, you will need to keep a record of your service providers Quality Management procedures.

For Mercia members, we have put together a document outlining our current internal Quality Management Procedures in:

  • Training
  • Peer Reviews
  • Technical Queries
  • Publications
  • and more...
Access Mercia's Internal Quality Management Procedures

ISQMs: Training Courses

We are busy building our portfolio of related training

Available Now

Root Cause Analysis

An introduction and guide for audit principals

View Details ▶

Available Now

Audit Update and Topical Issues

Includes a useful summary of ISQM (UK)1 and ISQM 2

View Details ▶

Available Now

Accounting and Auditing Quarterly Updates

Each quarter will include a different aspect of the ISQMs

View Details ▶

Available Now

ISQM 1 - Risk Assessment

Risk Assessment under ISQM 1 including practical examples

View Details ▶

Available Now

ISQM 1 - Monitoring and Remediation

Monitoring and remediation of the System of Quality Management (SOQM) including practical examples

View Details ▶

Available Now

ISQM 2 – Engagement Quality Reviews

ISQM 2 including how it links to the requirements of ISQM 1

View Details ▶

Related Articles on ISQMs

Web articles on the forthcoming changes are available below:

ISQM 1 - Implementing Quality Management Procedures

How should your firm begin the implementation of ISQM policies and procedures? What are the the ongoing monitoring remediation and evaluation of their effectiveness? We explore what firms need to do to get ready for ISQM.

How to move from ISQC (UK) 1 to ISQM (UK) 1

Transitioning from ISQC (UK) 1 to ISQM (UK) 1 is about moving from a standard that state the matters to be addressed in a firm’s procedure. To one that specifies a risk assessment process as a driver of the content of those procedures.

How to approach implementation of ISQM (UK) 1

ISQM (UK) 1 requires the firm to design, implement and operate a system of quality management. Doing so requires the exercise of professional judgement. This needs to take into account the nature and circumstances of the firm as well as the engagements it performs.

ISQM: Preparing for the new Quality Management standards

15 December 2022 is a date that should be at the forefront of every senior auditor’s mind at present. This is the date that the new quality management standards come into force. And if you haven’t started preparing for their introduction already, you need to start now.

 

ISQM Preparation Support

Get Advice and Support for getting your firm ready for ISQM