ISQM 1 aims to strengthen an organization’s system of quality management (SOQM). It requires a firm to elaborate their own unified SOQM fit for the types of engagements a firm typically takes on.
When complying with ISQM 1 a firm builds confidence with regulators, clients, and the public that they have taken sufficient steps to ensure their work (and systems their work relies on) are of a high standard. It is expected that the SOQM is enforced through specific risk assessment, monitoring, and remediation processes at the firm, with evidence of compliance available in the data systems that empower business.
ISQM 1, one of the three new and updated quality control guidelines published by the IAASB, calls for a more cohesive approach to quality management than what was expected before. In short, it seeks to improve how public accounting firms view their quality controls related to engagements.
These improvements come in response to a series of past audit failures that were rooted in quality control problems, including:
If your firm operates internationally, then you likely meet the requirements to have to be ISQM 1 compliant – the only issue is how difficult is the process to meet the requirement. If it can be met with a single system that also assists with many other requirements, that’s very easy on a firm.
ISQM 1 is effective December 15, 2022. By this date, firms must have their SOQM implemented and rolled out. All impacted firms will have their first annual evaluation as soon as a year after the effective date.
ISQM 1 can be readily solved with enterprise client data management systems that apply quality checks to every data change and capture engagement restrictions over time to ensure work is being done in compliance across the firm. Even more, such systems can ease reporting requirements for the integral data that is contained.
Kingland has a rich history of helping the largest public accounting firms comply with regulatory change. We want to make sure our clients are not just meeting the ISQM 1 requirements, we want to ensure firms are exceeding them.
Current clients using the Kingland Platform will have an easier time responding to this change because our software can be the center of their SOQM. If you aren’t on board already, we would like to show you how our software products can help you prepare for ISQM 1.