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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Quality management (firm and engagement level)

Dunmore Audit has a quality risk that engagement teams lack sufficient time to perform audits properly during the busy season. Management monitoring shows that partners on several engagements were allocated more than the firm's maximum number of audits. Which action best reflects the remediation requirement of ISQM 1?

The firm should evaluate the severity and pervasiveness of the deficiency, investigate its root cause, and implement remedial actions that address that cause. Merely disciplining partners, waiting for the annual evaluation or deleting the risk would not meet ISQM 1's monitoring and remediation requirements.

  1. AEvaluate the severity and pervasiveness of the deficiency, investigate the root cause, and design and implement remedial actions that address the root causesCorrect
  2. BReprimand the partners concerned and treat the deficiency as resolved
  3. CWait until the next annual evaluation to decide whether the deficiency matters
  4. DRemove the quality risk from the register because the responses did not operate

Explanation

ISQM 1 requires the firm to evaluate identified deficiencies, investigate root causes, assess severity and pervasiveness, and design and implement remedial actions that are responsive to the root causes. Disciplining individuals does not address why the allocation failed, and removing the risk is inappropriate because the risk remains.

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