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

Kestrel Audit is reviewing how it obtains and communicates independence confirmations. Which practice best satisfies ISQM 1's requirement relating to relevant ethical requirements?

The firm should obtain documented confirmation of compliance with independence requirements at least annually from all personnel required to be independent, and communicate the requirements and expectations to them. One-off declarations, partner-only confirmations or client management's assurance do not meet ISQM 1.

  1. AObtaining a one-off independence declaration from each partner when they join, with no further confirmations
  2. BObtaining written confirmation of compliance with independence requirements at least annually from all personnel required to be independent, and communicating the requirements and the firm's expectations to themCorrect
  3. CRelying on the audit client's management to confirm that the firm is independent
  4. DRequiring independence confirmations only from partners and not from audit staff, because staff cannot influence the audit outcome

Explanation

ISQM 1 requires the firm to communicate independence requirements to personnel and others subject to them, and to obtain, at least annually, documented confirmation of compliance from all personnel required by relevant ethical requirements to be independent. A one-off declaration is insufficient, and client management cannot confirm the firm's independence. Staff are within scope because they are subject to independence requirements.

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