Auditing Standards Board Issues Standards to Increase Compliance Complexity
Earlier this month, the Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA) issued exposure drafts of three interrelated quality management standards applicable to all CPA firms performing audits, reviews and other assurance and related assurance services under U.S. auditing and attestation standards.
Based on new international quality management standards recently approved by the International Auditing and Assurance Standards Board (IAASB), the standards will add increased compliance complexity to adherence with professional standards and will expose accounting firms that fail to comply to increased scrutiny from regulators and the potential for increased professional liability.
Among other new requirements, the standards include significant new requirements such as:
- Risk assessment – identification of quality objectives, risks and responses
- Monitoring – increased monitoring of the overall system of quality management above and beyond the inspection of completed engagements
- Annual evaluation of the effectiveness of a firm’s system of quality management
Implementation of the new quality management standards present a significant undertaking that will require the identification and commitment of dedicated resources by firms if they are to meet the requirements of the standards and the expectations of external stakeholders. While the Big 4 and member firms of some large international networks commenced implementation efforts before the international standards were finalized, many U.S. firms have not yet assessed their readiness or the level of effort that will be required.
The Lemme Accounting Firm Risk & Quality Management Consulting Services Practice has extensive experience advising firms on their systems of quality management and can assist your firm in preparing for implementation of the new quality management standards.
EPIC offers this material for general information only. EPIC does not intend this material to be, nor may any person receiving this information construe or rely on this material as, tax or legal advice. The matters addressed in this document and any related discussions or correspondence should be reviewed and discussed with legal counsel prior to acting or relying on these materials.