Days to prepare for ISQM:

ISQMs

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.

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.

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 prepare for ISQMs, Mercia has created an extensive Risk Assessment Tool. This tool highlights over 100 different potential Quality Management risks and responses for them.

Designed to suit any size firm, the Mercia Risk Assessment Tool makes preparing for ISQM easy.

Get Started with ISQMs

Need help getting started with ISQMs? 

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

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 Risk Assessment Tool to get your firm ready in time for ISQM.

Available in Spring 2022

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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 Assessment Tool 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 600 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.

ISQMs: Training Courses

We are busy building our portfolio of related training

Available Now

Root Cause Analysis

An introduction and guide for audit principals

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Available Now

Audit Update and Topical Issues

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

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Available Now

Accounting and Auditing Quarterly Updates

Each quarter will include a different aspect of the ISQMs

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Available Now

ISQM 1 - Risk Assessment

Risk Assessment under ISQM 1 including practical examples

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Available Now

ISQM 1 - Monitoring and Remediation

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

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Available Now

ISQM 2 – Engagement Quality Reviews

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

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Related Articles on ISQMs

Web articles on the forthcoming changes are available below:

Quality management for audits – The Engagement Quality Review

Earlier this year, we published a blog setting out some key changes that are on their way that will fundamentally affect audit quality.

 

Finalisation of Quality Management Standards

The Financial Reporting Council (FRC) has published the long-awaited final versions of its updated suite of quality management standards.

 

ISQM Preparation Support

Get Advice and Support for getting your firm ready for ISQM