Guide to Using International Standards on Auditing in - IFAC

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<strong>Guide</strong> <strong>to</strong> <strong>Using</strong> <strong>International</strong> <strong>Standards</strong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts
Exhibit 4.6-2
Scope of Possible Control Activities:
Firm
Level
Firm’s Values and Goals
Leadership & assigning of QC responsibilities
Risk assessment
Staff development, management, & discipline
Information systems (independence, scheduling, clients, staff, etc.)
Documenting the QC system
QC moni<strong>to</strong>ring and continual improvement
Leadership
Ethics and
Independence
Professional
Judgment
Professional
Skepticism
Supervision and
File Reviews
Engagement
Level
Complying with ISAs Relevant <strong>to</strong> the Audit
Client
Acceptance
Assign Staff
Responsibilities
Consultation
and Use of
Experts
Documentation
Release of
Audit Report
4.7 Moni<strong>to</strong>ring
An important element of a control system is the moni<strong>to</strong>ring of its fitness and operational effectiveness.
This can be achieved through an independent review of the operating effectiveness of the firm-level and
engagement-level policies/procedures, and inspection of completed engagement files.
An effective moni<strong>to</strong>ring process helps <strong>to</strong> develop a culture of continual improvement, wherein partners and
staff are committed <strong>to</strong> quality work and rewarded for improving performance.
A firm’s moni<strong>to</strong>ring process could be divided in<strong>to</strong> two parts, as follows:
• Ongoing moni<strong>to</strong>ring (other than the cyclical file inspections)
An ongoing (suggest annual) consideration and evaluation of the firm’s system of quality control helps <strong>to</strong>
ensure that the policies and procedures in place are relevant, adequate, and operating effectively. When
performed and documented on an annual basis, this moni<strong>to</strong>ring will support the requirement <strong>to</strong>
communicate with staff each year about the firm’s plans <strong>to</strong> improve engagement quality. This scope of
ongoing moni<strong>to</strong>ring addresses each of the quality control elements, and includes an assessment of whether:
– The firm’s quality control manual has been updated for new requirements and developments,
– Those assigned quality control responsibilities in the firm (if any) have actually fulfilled their roles,
– Written confirmations (by partners and staff) have been obtained <strong>to</strong> ensure each individual’s
compliance with the firm’s policies and procedures on independence and ethics,
– There is ongoing professional development for partners and staff,
– Decisions related <strong>to</strong> acceptance and continuance of client relationships and specific engagements
are in compliance with the firm’s policies and procedures,
– The code of ethics has been followed,
– Suitably qualified people were assigned as the engagement quality control reviewers and