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

Harlow Assurance uses an AI-based tool, bought from an external vendor, to analyse journal entries on audit engagements. Under ISQM 1, which action is most consistent with the firm's responsibilities for this technological resource?

The firm must determine that the technological resource is appropriate for its intended use and set policies for its implementation, maintenance and use before teams rely on it. Buying the tool externally does not remove the firm's responsibility under ISQM 1 for the quality of its resources.

  1. ARely on the vendor's marketing claims because the tool is externally developed and therefore the firm bears no responsibility
  2. BAllow each engagement team to decide individually whether the tool is appropriate, without firm-level policies
  3. CEstablish whether the tool is appropriate for its intended use, and set policies on how it is implemented, maintained and used, before engagement teams rely on itCorrect
  4. DPermit use only after the first audit in which it is used has been inspected by the regulator

Explanation

ISQM 1 requires the firm to design responses so that technological resources are appropriate, implemented, maintained and used as intended. External sourcing does not remove this duty, so option 1 is wrong. Leaving the decision to individual teams lacks firm-level policy, and regulator inspection is not a precondition.

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