Beyond Implementing a System of Quality Management

September 16, 2022
August 23, 2022
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Julia Penny joined me to discuss what comes next beyond implementing a system of quality management and how technology can be utilised to assist the person with overall responsibility. This will also ensure annual reviews of your system of quality management occur and become embedded in your firm’s culture.


What can firms expect after they implement a system of quality management

In your firms, the person with overall responsibility for the system of quality management, is the most senior person in the partnership, this cannot be delegated. While overall responsibility cannot be delegated, various areas can be assigned to named team members and your software can be utilized to keep a record of who is responsible for which aspect.

If a spreadsheet is employed, filters can be set to show responsibilities and links, however, how do we make sure that it's still working? How do we ensure monitoring and review is occurring? And the monitoring requirements of the old standards does still have to occur.

While you are going to expect things which will seem quite familiar, for example cold reviews of files, there are significantly beefed-up requirements in terms of showing that you've dealt with the points that have been identified and that they have been tracked. Tracking is something which software can help with enormously.

Things which are not working in the system will require root cause analysis, however employing a quality management system gives the possibility of finding out before things go wrong. For example, if one of your risks is ‘not enough time is spent on planning’ this ensures it can be monitored effectively.

Audit teams can be rooted into SALY, (Same as Last Year) because consideration has not been given to new risks. Software based audits can be set to highlight such issues, flags can be utilised to highlight areas of risk such as:

  • forms are not being filled in,
  • adequate amounts of time are not being spent addressing items,
  • things being done in the wrong order,
  • things being done by the wrong person.

Flags would highlight these live in your system, which is much more powerful in recognising what needs to be done now to solve the problem. This gives you the ability to turn what is a very slow retrospective system into a modernised system of real- time quality management.

How will having the right technology to support the effective execution of quality engagements assist in implementing this system of quality management

One of the key areas the new standards require is for firms to assess their resources. If external resources are brought in, firms have an obligation to assess their suitability. For example, buying a piece of software, an audit manual in paper form, or a checklist, these will require a review to establish if they meet the required needs. This will also need to be documented by firms to demonstrate how these are implemented and used.

From a practical point of view, software is enormously helpful. It enables firms to have all of the aspects recorded in a central location rather than manually handling. Software can manage the different risks, responses, and updates whenever a new risk is added, or an old risk is removed. This is more efficient as it can be very difficult to manually record and monitor each item.

Desktop applications can no longer support the flexible ways of working required by the profession due to fundamental changes in recent years. This has created a need for firms to think critically about the resources that they're using, and we will see a continuation of this as technology advances.

As desktop applications become dated there is a big opportunity for the quality management standards and the implementation of them to drive a broader technology adoption across the profession. As firms critically look at whether the tools that are being used are fit to be able to drive quality, drive culture across the organization, firms will note that cloud-based applications are going to provide the flexibility they require.

A quality management system does not have to be a completely independent and isolated. The ability to bring it in alongside the engagement documentation system and create a linkage between the quality objectives and the responses to the risks, alongside the actual day-to-day execution of the audit work is a huge opportunity to create synergy between the two.

The monitoring activities, the maintenance of the system will look completely different because there's an automation opportunity for firms to embrace. For a cultural leadership team this is an opportunity to embed and drive the achievements and aspirations of the firm in to the first-year graduates and what they are doing on a daily basis. The ability to push the quality management system and the engagement execution system is exciting in terms of the ability it gives to mine data, to create dashboards and content.

In the profession currently we have a split, big firms are technology driven in all their systems, while smaller firms that provide paper-based audit programs alongside their same audit programs in software. But the pandemic, has taught us that a paper-based environment makes things difficult.

We are learning how powerful it is to be able to have software and cloud-based offering. To know we can connect to the cloud and access what we need from anywhere without the need to check in or check out and have multiple people working on the same file is becoming more accepted.

By continuing to work on paper or by using archaic systems we're missing some key opportunities to be able to streamline, to be able to see what's going on, to be able to move more dynamically as the risks change and to identify where we might be falling into traps before we fall into those traps.

Taken from a Conversation with Julia Penny, JS Penny Consulting. To hear more of the conversation, watch the on demand recording or download the free guide.

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