2024 New Quality Management Issues and Updates

Author: Pat Patterson

An engagement quality review is a specified response the firm designs and implements to address quality risks. An EQ reviewer performs the EQ review at the engagement level on behalf of the firm. SQMS No. 1, A Firm’s System of Quality Management, requires that the firm determine when an engagement quality review is an appropriate response to quality risks.

SQMS Engagement Quality Reviews (SQMS No. 2) addresses:

• The appointment and eligibility of the EQ reviewer and
• Performance of EQ reviews.

The changes are intended to respond to issues and challenges with the requirements for EQ reviews in SQMS No. 1 and the previous Statement on Quality Control Standards (SQCS) No. 8, A Firm’s System of Quality Control (QC sec. 10), and AU-C section 220, Quality Control for an Engagement Conducted in Accordance with Generally Accepted Auditing Standards.

This is accomplished by:

• Creating one standard that contains the requirements for EQ reviews, and by making changes that clarify and strengthen aspects of those requirements for a more robust EQ review
• Revising requirements that focus on the objective evaluation of the significant judgments the engagement team makes and the conclusions reached.

SQMS No. 2 is how this is accomplished by an engagement quality review. This course will address those requirements.

Publication Date: December 2024

Topics Covered

• Enhanced eligibility for EQ reviewers
• Cooling-off period before the engagement partner can serve as EQ reviewer
• Sufficient time to perform the EQ review
• Eligibility criteria for EQ reviewers
• Having competence, capabilities, including sufficient time, and appropriate authority
• Compliance with relevant ethical requirements
• Objectivity
• Independence
• Engagement quality reviewer's responsibilities
• Performance and documentation requirements
• Significant judgments and significant matters, including the exercise of professional skepticism by the engagement team

Learning Objectives

• Explain and apply the requirements and responsibilities of the new Quality Management standards
• Explain and apply the Quality Management Standards for the Engagement Quality Reviewer for audits, reviews, and compilations
• Identify the effective starting date of the implementation of the new quality management standards
• Identify the component that deals with fulfilling relevant ethical requirements by the firm and its personnel
• Identify an action that you should do in 2026

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Accounting (1 hour), Auditing (1 hour)

Program Prerequisites
Have an understanding of Quality Management and its requirements

Advance Preparation
None