MonitoringMonitoring

Monitoring

Monitoring the Firm’s Quality Control Policies and Procedures

1. The firm shall establish a monitoring process designed to provide it with reasonable assurance that the policies and procedures relating to the system of quality control are relevant, adequate, and operating effectively. This process shall:
   1. Include an ongoing consideration and evaluation of the firm’s system of quality control including, on a cyclical basis, inspection of at least one completed engagement for each engagement partner;
   2. Require responsibility for the monitoring process to be assigned to a partner or partners or other persons with sufficient and appropriate experience and authority in the firm to assume that responsibility; and
   3. Require that those performing the engagement or the engagement quality control review are not involved in inspecting the engagements. (Ref: Para. A64‑Aus A68.1)

Evaluating, Communicating and Remedying Identified Deficiencies

1. The firm shall evaluate the effect of deficiencies noted as a result of the monitoring process and determine whether they are either:
   1. Instances that do not necessarily indicate that the firm’s system of quality control is insufficient to provide it with reasonable assurance that it complies with AUASB Standards, relevant ethical requirements, and applicable legal and regulatory requirements, and that the reports issued by the firm or engagement partners are appropriate in the circumstances; or
   2. Systemic, repetitive or other significant deficiencies that require prompt corrective action.
2. The firm shall communicate to relevant engagement partners and other appropriate personnel deficiencies noted as a result of the monitoring process and recommendations for appropriate remedial action. (Ref: Para. A69)
3. Recommendations for appropriate remedial actions for deficiencies noted shall include one or more of the following:
   1. Taking appropriate remedial action in relation to an individual engagement or member of personnel;
   2. The communication of the findings to those responsible for training and professional development;
   3. Changes to the quality control policies and procedures; and
   4. Disciplinary action against those who fail to comply with the policies and procedures of the firm, especially those who do so repeatedly.
4. The firm shall establish policies and procedures to address cases where the results of the monitoring procedures indicate that a report may be inappropriate or that procedures were omitted during the performance of the engagement. Such policies and procedures shall require the firm to determine what further action is appropriate to comply with relevant AUASB Standards, relevant ethical requirements, and applicable legal and regulatory requirements, and to consider whether to obtain legal advice.