ACCA Strategic Professional · Advanced Audit and Assurance (International) · Quality management (firm and engagement level)
Brightwell & Co, an audit firm, is designing its system of quality management under ISQM 1. The managing partner says that responsibility for the system should sit with the partner who leads the firm's largest audit engagement, since that partner has the most practical experience. Which statement best reflects ISQM 1?
ISQM 1 requires ultimate responsibility and accountability for the firm's system of quality management to be assigned to the firm's CEO or managing partner, or the managing board of partners. Leadership must set the tone on quality. It is not based on client size and cannot be left solely to engagement partners.
- AThe firm must assign ultimate responsibility and accountability for the system of quality management to the firm's CEO or managing partner (or managing board of partners), and it must be the firm's leadership who set the toneCorrect
- BUltimate responsibility may be delegated to the partner with the largest client portfolio, because ISQM 1 links accountability to client size
- CResponsibility for the system of quality management rests with each engagement partner only, and the firm itself has no overall responsibility
- DResponsibility for the system rests with the external regulator, which approves the firm's quality objectives each year
Explanation
ISQM 1 requires the firm to assign ultimate responsibility and accountability for the system of quality management to the CEO or managing partner (or the managing board of partners). Leadership must also demonstrate commitment to quality through its actions and messages. Assigning it by client size is not a criterion in ISQM 1, and engagement partners are responsible only at engagement level under ISA 220 (Revised).
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