NZAuASB Update 1/2019
|This NZAuASB Update tells you about the latest IAASB consultations.|
Significant changes proposed on quality management for firms and engagements
The International Auditing and Assurance Standards Board (IAASB) seeks public comment by 1 July 2019 on three interrelated standards that address quality management.
The proposals bring important changes to the way professional accountancy firms are expected to manage quality—for audits, reviews, and other assurance and related services engagements.
The proposed standards include a new proactive risk-based approach to effective quality management systems within firms that establish the foundation for consistent engagement quality. The new approach is intended to improve the scalability of the standards because it promotes a system tailored to the nature and circumstances of the firm and its engagements.
The proposed changes are significant and will require firms to adjust how they manage quality, both for the firm and the engagement teams. The revisions will likely require increased effort for most firms. They could also affect firms’ organisational structures and operations. The revisions will also require greater leadership by engagement partners in managing and achieving quality engagements.
The key changes are:
- A new proactive risk-based approach to firms’ systems of quality management in ISQM 1
- Modernising the standards for an evolving and increasingly complex environment, including addressing the impact of technology, networks, and use of external service providers
- Increasing firm leadership responsibilities and accountability, and improving firm governance
- More rigorous monitoring of quality management systems and remediation of deficiencies
- Enhancing the engagement partner’s responsibility for audit engagement leadership and audit quality
- Addressing the robustness of engagement quality reviews, including engagement selection, documentation, and performance
See what is changing...
A new ISQM 1 (previously ISQC 1) addresses a firm’s responsibility to establish a system of quality management to support quality engagements.
A proposed new standard ISQM 2 addresses engagement quality reviews.
Proposed changes to ISA 220 address the management of engagement quality for audit engagements.
Outreach planned in New Zealand
A key question we (and the IAASB) want to explore, is the scalability of the standards.
In addition to roundtables and a webinar, the NZAuASB is planning half-day workshops to assist small and medium practices in working through the proposed new approach to quality management, and to obtain feedback to inform its submission to the IAASB about any foreseeable implementation difficulties.
We will provide more details about our planned outreach activities soon.
You can either respond directly to the IAASB on the Exposure Drafts, or you can share your views with the NZAuASB, in writing or by attending one of our planned outreach events.
We need your responses to the NZAuASB by
IAASB Future Strategy & Work Plan Consultation
The evolving environment in which the IAASB operates demands a strategy that reflects, among others, changing technology, a dynamic small- and medium-sized entity landscape, and emerging reporting needs.
In the Proposed Strategy for 2020–2023 and Work Plan for 2020–2021, the IAASB puts forth a way forward that it believes meets stakeholders’ evolving needs, and is in the public interest.
Have a look
The Work Plan highlights the Board’s commitment to completing significant projects currently underway, while balancing the needs of different stakeholders.
The IAASB’s strategy will have a direct impact on the NZAuASB’s standard-setting activities here in New Zealand, given that our auditing and assurance standards are largely based on standards issued by the IAASB.
This is your opportunity to shape the NZAuASB's strategy for commenting on the proposed draft work plan.
Respond directly to the IAASB by 4 June 2019.
Share your views with the NZAuASB by 20 May 2019.
This NZAuASB Update is intended to provide subscribers with a summary of the recent activities of the New Zealand Auditing and Assurance Standards Board (NZAuASB). Links to websites are correct at the time of publication. Subscribers should not rely on this newsletter as a definitive publication of updates. The External Reporting Board and its sub-Board the NZAuASB do not guarantee, and accept no legal liability whatsoever arising from or connected to, the accuracy, reliability, currency, timeliness or completeness of this newsletter. The information contained in this newsletter does not constitute advice and should not be relied upon as such.