Canadian Standards on Quality Control

Quality Management

Summary

Auditors must effectively manage audit quality, both at the firm and the engagement level, with high-quality audits supporting financial stability.

Staff Contact(s)

Jacqui Kuypers, CPA, CA

Principal, Auditing and Assurance Standards Board

Project Status

  • Information gathering

    Completed prior to 2016

  • Approving project

    The IAASB approved the project in December 2016

  • Consulting stakeholders

    AASB Exposure Draft issued April 2019. Comment deadline June 7th, 2019.

  • Deliberating feedback
  • Final pronouncement

Meeting & event summaries


February 11, 2019

AASB Decision Summary — January 24-25, 2019

The AASB unanimously approved the exposure draft of proposed Canadian Standard on Quality Management (CSQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements; CSQM 2, Engagement Quality Reviews; and CAS 220, Quality Management for an Audit of Financial Statements. The exposure draft is based on the International Auditing and Assurance Standards Board exposure draft of proposed International Standard on Quality Management (ISQM) 1, ISQM 2, and International Standard on Auditing (ISA) 220. The exposure draft for CSQM 1 proposes to adopt the same scope as ISQM 1. This would be a significant change in Canada because the current Canadian standard does not apply to related services engagements such as compilation and agreed-upon procedures engagements. The Board expects to issue the exposure draft in late March 2019, with a comment deadline of June 7, 2019.

January 14, 2019

AASB Decision Summary — December 3-4, 2018

The AASB provided input to the CPA Canada nominee on the International Auditing and Assurance Standards Board (IAASB) about issues related to the IAASB’s project to adopt:

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

The IAASB is expected to approve the exposure drafts of ISQM 1, ISQM 2, and ISA 220 at its December 2018 meeting. The AASB reviewed a draft Canadian exposure draft that it expects to approve in January 2019.

October 15, 2018

AASB Decision Summary — October 15-16, 2018

The AASB discussed Canadian issues related to the IAASB’s project to revise International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, including the proposed scope of the Canadian equivalent standard.

September 14, 2018

AASB Decision Summary — September 13-14, 2018

The AASB provided input to the CPA Canada nominee on the International Auditing and Assurance Standards Board (IAASB) on issues related to the IAASB’s project to:

  • revise International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and International Standard on Auditing (ISA) 220, Quality Control for an Audit of Financial Statements, including the:
    • scalability of requirements and application material;
    • interrelationship of components within the system of quality management; and
    • concept of public interest, professional skepticism and professional judgment; and
  • develop a new standard, ISQC 2, Engagement Quality Review, including:
    • the objective of the standard; and
    • whether engagement quality reviews should be required for entities with significant public interest.

The IAASB is expected to approve exposure drafts of ISQC 1, ISQC 2 and ISA 220 in December 2018. The AASB would approve Canadian exposure drafts shortly thereafter.

June 12, 2018

AASB Decision Summary – June 11-12, 2018

The Board provided input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s project to revise International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and ISA 220, Quality Control for an Audit of Financial Statements, including:

  • the firm’s risk assessment process and how it is applied to the components of the firm’s system of quality management;
  • the monitoring and remediation process, including how practitioners from smaller firms could implement the requirements;
  • the proposed ordering of components in the standard;
  • definitions of engagement partner and engagement team;
  • leadership responsibilities, including need for the engagement partner to be actively involved in the engagement; and
  • engagement performance, including direction, supervision and review.

The IAASB is expected to approve an exposure draft of ISQC 1 in September 2018 and ISA 220 in December 2018. The Board would approve Canadian exposure drafts shortly thereafter. The Board will continue to discuss these and other issues at future meetings.

May 3, 2018

AASB Decision Summary – May 3, 2018

The Board discussed the International Auditing and Assurance Standards Board’s (IAASB) project to revise International Standard on Quality Control (ISQC) 1, Quality Control for Firms That Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements. The Board agreed that staff would perform limited consultations prior to the release of the IAASB’s exposure draft, which is expected in the fall of 2018. These limited consultations will help the Board identify Canadian-specific issues related to the IAASB’s proposals.

March 6, 2018

AASB Decision Summary – March 5-6, 2018

The Board provided input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s project to revise International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements. Key issues discussed included:

  • the components of firm culture that impact quality;
  • the proposed ordering of components in the standard;
  • the monitoring and remediation process, including how practitioners from smaller firms could implement the requirements;
  • requirements addressing the firm’s technology, including whether technology developed by the firm or obtained from an external provider contributes to quality of services the firm provides; and
  • the overall length of the standard, including whether certain appendix material could be removed.

The IAASB is expected to approve an exposure draft of ISQC 1 in September 2018. The Board will approve a Canadian exposure draft shortly thereafter. The Board also discussed whether it should conduct targeted stakeholder outreach before the exposure draft is released to identify and discuss Canadian specific issues. The Board will continue to discuss these and other issues at future meetings.

December 5, 2017

AASB Decision Summary – December 4-5, 2017

The Board provided input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s project to revise ISQC 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements and ISA 220, Quality Control for an Audit of Financial Statements.

Key issues discussed relating to ISQC 1 included:

  • the scalability of the standard;
  • the overall length of the standard, including whether certain application material could be removed;
  • responsibilities for independence; and
  • the robustness of the proposed changes and whether they address key public interest issues identified in the IAASB’s Invitation to Comment, “Enhancing Audit Quality in the Public Interest – A Focus on Professional Skepticism, Quality Control and Group Audits.”

Key issues discussed relating to ISA 220 included:

  • the proposed objective of the standard;
  • requirements related to engagement acceptance and continuance;
  • requirements related to use of resources; and
  • requirements regarding the sufficient and appropriate involvement of the engagement partner.

September 15, 2017

AASB Decision Summary – September 14-15, 2017

The Board provided input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s project to revise ISQC 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements. Key issues discussed included:

  • whether to retain the requirement to have an engagement quality control review for all audits of financial statements of listed entities, or whether such reviews should be required only for audits of general purpose financial statements of listed entities;
  • whether the proposed requirement for the firm to establish policies and procedures to select other engagements to have an engagement quality control review will result in the appropriate selection of high-risk engagements; and
  • the eligibility and appointment of the engagement quality control reviewer, including specific considerations for small and medium-sized practitioners.

June 13, 2017

AASB Decision Summary – June 12-13, 2017

The Board provided input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s project to revise ISQC 1, International Standard on Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and ISA 220, Quality Control for an Audit of Financial Statements. Key issues discussed relating to ISQC 1 included the:

  • need for further considerations for small and medium-sized practitioners in the proposed revisions;
  • potential challenge of setting out the public interest role of firms in the standard;
  • how the proposed components of quality management and, in particular, the quality management process, would be applied in practice; and
  • need for a more a principles-based approach in making revisions.

Key issues discussed relating to ISA 220 included the:

  • interaction of ISA 220 with ISQC 1 and other relevant ISAs;
  • objective of the auditor under ISA 220;
  • four-step approach proposed by the IAASB Task Force in addressing quality management at the engagement level; and
  • impact of a proposed requirement regarding information sharing and communication between the firm and the engagement team.

March 7, 2017

AASB Decision Summary – March 6-7, 2017

The AASB provided input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s project to revise ISQC 1, International Standard on Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and ISA 220, Quality Control for an Audit of Financial Statements. Key issues discussed included:

  • considerations for small and medium-sized practitioners;
  • overlap with topics addressed in the International Ethics Standards Board for Accountants’ Code of Ethics;
  • the authority and eligibility of the engagement quality control reviewer; and
  • the firm’s approach to selecting the engagement quality control reviewer.

November 29, 2016

AASB Decision Summary – November 28-29, 2016

The AASB provided input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s project proposal addressing quality control and group audits. The AASB expressed concerns with the lack of detail in the project proposal related to group audits. However, the AASB supports these projects and intends to set up two advisory groups to assist staff and provide input on Canadian issues.

News


April 12, 2019

Resource

In-Brief Podcast Script – The New Approach to Quality Management and How it Can Benefit You

This podcast script provides a plain and simple overview of the components of the system of quality management, and how the new risked-based approach in ISQM 1 can benefit you. Download the script to read the full details.

April 12, 2019

Resource

In-Brief Podcast Script – Key highlights of the AASB’s Exposure Draft on Quality Management at the Firm and Engagement Level

This podcast provides a plain and simple overview of the key highlights of the AASB’s Exposure Draft on Quality Management at the Firm and Engagement Level. Download the script to read the full details.

April 12, 2019

Resource

In-Brief Podcast – Key highlights of the AASB’s Exposure Draft on Quality Management at the Firm and Engagement Level

This podcast provides a plain and simple overview of the key highlights of the AASB’s Exposure Draft on Quality Management at the Firm and Engagement Level. Listen now for full details.

April 12, 2019

Resource

In-Brief Podcast – The New Approach to Quality Management and How it Can Benefit You

This podcast provides a plain and simple overview of the components of the system of quality management, and how the new risked-based approach in ISQM 1 can benefit you. Listen to the podcast for full details.

April 5, 2019

News

In-person Workshop – Quality Management

You are invited to attend an in-person workshop to learn about the new Exposure Draft, Quality Management at the Firm and Engagement Level, Including Engagement Quality Reviews. This interactive workshop is taking place on May 15 and will provide details about the new proposals in CSQM 1. Register today to secure your spot!

April 5, 2019

News

Virtual Roundtable Discussions – Quality Management

You are invited to attend a virtual roundtable discussion of the new Exposure Draft, Quality Management at the Firm and Engagement Level, Including Engagement Quality Reviews. Virtual roundtable discussions are taking place May 14, 16, 22, and 23. Register today and to have your say!

April 5, 2019

Document for Comment

AASB Exposure Draft – Quality Management at the Firm and Engagement Level, Including Engagement Quality Reviews

The AASB issued an Exposure Draft proposing the adoption of ISQM 1, ISQM 2 and ISA 220 (Revised), with appropriate Canadian amendments, if any. Stakeholders are invited to comment until June 7, 2019. For full details, visit the Document for Comment’s page.

April 1, 2019

News

Webinar – Quality Management at the Firm and Engagement Level, Including Engagement Quality Reviews

The AASB is issuing an exposure draft on the revised quality management standards at the firm and engagement level, including engagement quality reviews. Register now for the webinar to learn about the proposals and how they will affect your current practice.

March 29, 2019

Resource

In Brief – A plain and simple overview of the AASB’s exposure draft on Quality Management

The Board plans to issue an exposure draft proposing the adoption of ISQM 1, ISQM 2 and ISA 220 (Revised), with appropriate Canadian amendments, if any. Read our In Brief for an overview of the exposure draft and ways you can provide input.

March 12, 2019

News

Quality Management at the Firm and Engagement Level, Including Engagement Quality Reviews

The IAASB issued three Exposure Drafts addressing quality management at the firm and engagement level, including engagement quality reviews, as well as an overall explanatory memorandum, FAQs and draft examples for proposed ISQM 1. Stakeholders are invited to comment by July 1, 2019. Visit the news page for full details.

March 12, 2019

Resource

In-Brief Podcast – The IAASB’s Exposure Draft on Quality Management is Now Available for Comment

This podcast script provides a plain and simple overview of the key highlights of the IAASB’s Exposure Draft on quality management at the firm and engagement level.

March 12, 2019

Resource

In-Brief Podcast – The IAASB’s Exposure Draft on Quality Management is Now Available for Comment

This podcast provides a plain and simple overview of the key highlights of the IAASB’s Exposure Draft on quality management at the firm and engagement level.

Disclaimer

This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.