ISQM1 & 2 – What is in it for the firm?
Firms that have not adopted and implemented ISQC1 fully by now are at a disadvantage and need to catch up quickly to fully implement ISQM1, ISQM2 and ISA220 (revised); otherwise, in my opinion, they run the risk of their audit divisions being out of business in a few years.
Even though it may be seen as ‘just more compliance’, it should be approached from the point of view of accountants trying to assist you by telling you how to run your business. From a business point of view, you would want everything to be well planned, executed and monitored. When problems arise, you would want a structure to approach problems and resolve them.
Most firms already have a basic structure to achieve their business objectives, and if one laid the requirements over the existing procedures, one could identify the gaps and apply them sensibly, according to the circumstances and risks of the firm.
The root cause analysis and remediation route elaborated on in ISQM1 has a most beneficial effect on audit teams, and the enhancement of audit files. It reduces costs on audits, and boosts the confidence of teams and their communication with clients, which then improves client satisfaction. Retention of audit staff after their training contract also increases as audit becomes more enjoyable.
It is a time-consuming process and, if the firm cannot afford dedicated staff to administrate the process, LEAF’s professional and dedicated staff are always available to act as a back office in this regard.