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

Fenwick & Partners operates a firm-wide quality management system. A network of affiliated firms provides it with standard audit software and methodology. Under ISQM 1, which statement about network requirements or network services is correct?

The firm remains solely responsible for its system of quality management and must evaluate network services and requirements, adapting or supplementing them where necessary. Adopting network methodology or software does not transfer responsibility, and the evaluation duty applies regardless of whether the audited entity is listed.

  1. AThe firm must adapt or supplement network requirements and is solely responsible for its own system, evaluating the network's services before relying on themCorrect
  2. BThe firm's responsibility transfers to the network once the network's methodology is adopted
  3. CNetwork-provided audit software is exempt from the firm's evaluation because the network is regulated
  4. DThe firm need only evaluate network services if the engagement is for a listed entity

Explanation

ISQM 1 states that the firm remains responsible for its system of quality management even when network requirements or services are used. It must understand them, determine how they affect its system, and evaluate whether they are appropriate. Responsibility does not transfer, and there is no listed-entity or regulated-network exemption.

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