These were created by the International Auditing and Assurance Standards Board (IAASB) and have significant authority. They should be treated as the premium source of information for anyone requiring assistance, however large or small the issue.
The IAASB has also published a first-time implementation guide for ISA 220: Quality Management for an Audit of Financial Statements. This is intended to assist anyone working with the new standards to ensure proper understanding and implementation is followed.
At the time of writing, the standards for ISQM requirements are due to come into effect on December 15th, 2022. This date is extremely unlikely to change. The IAASB advises all companies set for audit to begin implementation as soon as possible. This is in order to avoid delays with the new auditing process itself.
The IAASB has not announced the creation of any new additional guidance materials. This means that anyone requiring more information should become familiar with the ISQMs and supporting information, found through the above links.
For more information, see our post on What is ISQM1?
When studying the new standards, it’s worth keeping a sense of the logic behind the revised regulations. The big change is a shift from quality control to quality management. This places a focus on risk assessment as a method of proving quality service is met.
Companies are no longer subject to a restrictive suite of standards. From the areas outlined in the ISQM guidelines, businesses can focus on areas solely relevant to their industry, size and circumstances. This in turn allows for a more tailored auditing process, where quality can be assessed with greater accuracy than before.
Read our guide to Why do we require new quality management standards? for more information.
With their emphasis on quality management over control, the new standards are not restrictive in their outlook. Companies are required to manage their own regulations, and it will be more difficult to employ standard responses. Everything outlined by a company or auditor should only be included if it is relevant to the audited company’s work.
The new standards may appear to make the auditing process much more complex. However, in time, the new company-led approach should slim down the process. Businesses will no longer have to demonstrate quality control in areas that are outside of their own particular jurisdiction.
For both businesses and auditors, the switch to a risk-based mindset cannot be dramatized. Risk is how quality will be measured.
Any potential deficiencies in a business procedure can be identified through risk assessments. Having an awareness of possible hurdles to quality should enable companies to better maintain their own levels of service, for both their own employees and their customer base.
The changes within ISQM have been in talks for several years now. So, businesses and auditing firms alike have had ample opportunity to prepare for the new ISQM standards. The IAASB recommends taking a granular approach, working through their processes individually. Allowing businesses and auditing firms to break down their operations into more palatable sections for their auditor.
Inflo software can help all firms manage their audits more effectively. Using AI through digital technology, Inflo can be your work buddy. They can look after the routine manual processes that take up most of your time. The software can map out insights, risk assessments and quality objectives.