Tmp 14966 Quality Control 470920136
AUD 610
QUALITY CONTROL
Quality Control
For CA firm, quality control comprises methods such as organizational structure and procedures that the firm establishes. It is a system that relates to the concepts of professional competence and the meeting of professional standards (technical and ethical) in providing professional services, so that audit failures and risks are reduced to an acceptably low level.
Quality control must be addressed at the professional, the audit firm and on individual engagement levels.
Importance of Quality
Control
Corporate scandals such as Enron and WorldCom cases have seriously undermined the credibility of the audit function and raised questions about the reliability of financial reporting.
The alleged audit failures in these cases have also attracted substantial criticisms regarding the competence and independence of auditors.
Control
Continued
Analyses of legal cases involving auditors have indicated that dishonest clients, management fraud, insolvency and unlawful acts, are the common high risk factors that often led to litigation.
In some legal cases, significant audit deficiencies have also been noted.
Quality control system aims at addressing these issues.
Measures Taken
Issuance of ISQC 1
To provide quality control standards for all assurance and related services at the firm level.
Revision of ISA 220
To provide quality control standards that are applicable only for audit engagements.
Elements of Quality
Control
ISQC 1 requires an accounting firm to establish a system of quality control designed to provide it with reasonable assurance that the following objectives are met:
Compliance with professional standards
Compliance with applicable regulatory and legal requirements
Reports issued are appropriate in the circumstances. Elements of Quality
Control - Continued
Leadership responsibilities for quality
Ethical requirements
Acceptance and continuance of clients and engagements
Human resources
Engagement
QUALITY CONTROL
Quality Control
For CA firm, quality control comprises methods such as organizational structure and procedures that the firm establishes. It is a system that relates to the concepts of professional competence and the meeting of professional standards (technical and ethical) in providing professional services, so that audit failures and risks are reduced to an acceptably low level.
Quality control must be addressed at the professional, the audit firm and on individual engagement levels.
Importance of Quality
Control
Corporate scandals such as Enron and WorldCom cases have seriously undermined the credibility of the audit function and raised questions about the reliability of financial reporting.
The alleged audit failures in these cases have also attracted substantial criticisms regarding the competence and independence of auditors.
Control
Continued
Analyses of legal cases involving auditors have indicated that dishonest clients, management fraud, insolvency and unlawful acts, are the common high risk factors that often led to litigation.
In some legal cases, significant audit deficiencies have also been noted.
Quality control system aims at addressing these issues.
Measures Taken
Issuance of ISQC 1
To provide quality control standards for all assurance and related services at the firm level.
Revision of ISA 220
To provide quality control standards that are applicable only for audit engagements.
Elements of Quality
Control
ISQC 1 requires an accounting firm to establish a system of quality control designed to provide it with reasonable assurance that the following objectives are met:
Compliance with professional standards
Compliance with applicable regulatory and legal requirements
Reports issued are appropriate in the circumstances. Elements of Quality
Control - Continued
Leadership responsibilities for quality
Ethical requirements
Acceptance and continuance of clients and engagements
Human resources
Engagement