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IAASA issues revised quality management standards

20/12/2021

Following public consultation, IAASA has today (21 December) issued:

  • International Standard on Quality Management (‘ISQM’) (Ireland) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements;
  • International Standard on Quality Management (Ireland) 2, Engagement Quality Reviews; and
  • International Standard on Auditing (‘ISA’) (Ireland) 220 (Revised December 2021), Quality Management for an Audit of Financial Statements.

They will replace International Standard on Quality Control (Ireland) 1 (Revised November 2020) and ISA (Ireland) 220 (Revised November 2020).

 

IAASA has also made conforming amendments to other standards in line with the changes made by the International Auditing and Assurance Standards Board (‘IAASB’) and Financial Reporting Council (‘FRC’).

 

The standards introduce a new quality management approach that is focused on proactively identifying and responding to risks to quality. The new approach requires a firm to customise the design, implementation and operation of its system of quality management based on the nature and circumstances of the firm and the engagements it performs. It also requires firms to transition to an integrated approach that reflects upon the system of quality management as a whole, rather than individual elements. The benefits of this new approach include:

  • A system that is tailored to the nature and circumstances of the firm and the engagements it performs;
  • A proactive response by the firm to changing circumstances and proactively managing or mitigating risks, and promoting continual improvement and responsiveness;
  • Increased emphasis on monitoring the system as a whole and timely and effective remediation; and
  • Improved integration of the components of the system of quality management.

 

The new standards are effective as of 15 December 2022 and will apply to periods as set out in the table below. Early adoption is permitted.

 

ISQM (Ireland) 1

ISQM (Ireland) 2

ISA (Ireland) 220
(Revised December 2021)

Systems of quality management in compliance with ISQM (Ireland) 1 must be designed and implemented by 15 December 2022. The evaluation of the system of quality management required by paragraphs 53-54 must be performed within one year following 15 December 2022.

Effective for:

  • Audits and reviews of financial statements for periods beginning on or after 15 December 2022; and
  • Other assurance or related services engagements beginning on or after 15 December 2022.

Effective for audits of financial statements for periods beginning on or after 15 December 2022.

 

The final ISQM (Ireland) 1 can be found here.

The final ISQM (Ireland) 2 can be found here.

The revised ISA (Ireland) 220 (Revised December 2021) can be found here.

The related conforming amendments can be found here.

The feedback paper is available here.

Responses received to the consultation are available here.

A short information video on the revised quality management standards is available here.

 

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