ACCA Strategic Professional · Advanced Audit and Assurance (International) · International regulatory frameworks for audit and assurance services
A regulator in Country T reviews Orion Audit's quality management system under ISQM 1. Orion's leadership assigned the system's operational responsibility to a partner who also leads its largest audit client team. The regulator also notes the firm has never evaluated its system. Which finding is MOST clearly a breach of ISQM 1?
Failing to evaluate the system of quality management and reach a conclusion is the clear breach. ISQM 1 requires the firm to evaluate its system at least annually and conclude on whether it gives reasonable assurance, whereas risk assessment, documentation and assigning responsibility are expected activities.
- AThe firm has not performed an annual evaluation of its system of quality management and concluded on itCorrect
- BThe firm uses a risk assessment process to identify quality risks
- CThe firm assigned operational responsibility to an individual with appropriate experience
- DThe firm documented its quality objectives
Explanation
ISQM 1 requires the individual assigned ultimate responsibility to evaluate the system at a defined point at least annually and conclude whether it provides reasonable assurance of meeting its objectives. Having a risk assessment, documentation and assigned responsibility are requirements being met, not breaches.
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