The Firm’s System of Quality Management The Firm’s System of Quality Management and Role of Engagement Teams

The Firm’s System of Quality Management and Role of Engagement Teams

1. Under ASQM 1, the objective of the firm is to design, implement and operate a system of quality management for audits or reviews of financial reports and other financial information, or other assurance or related services engagements performed by the firm, that provides the firm with reasonable assurance that: (Ref: Para. A13–A14)
   1. The firm and its personnel fulfill their responsibilities in accordance with Australian Auditing Standards and applicable legal and regulatory requirements, and conduct engagements in accordance with such standards and requirements; and
   2. Engagement reports issued by the firm or engagement partners are appropriate in the circumstances.[1]
2. This ASA is premised on the basis that the firm is subject to the ASQMs or to national requirements that are at least as demanding. (Ref: Para. A2–A3)
3. The engagement team, led by the engagement partner, is responsible, within the context of the firm’s system of quality management and through complying with the requirements of this ASA, for: (Ref: Para. A4–A11)
   1. Implementing the firm’s responses to quality risks (i.e., the firm’s policies or procedures) that are applicable to the audit engagement using information communicated by, or obtained from, the firm;
   2. Given the nature and circumstances of the audit engagement, determining whether to design and implement responses at the engagement level beyond those in the firm’s policies or procedures; and
   3. Communicating to the firm information from the audit engagement that is required to be communicated by the firm’s policies or procedures to support the design, implementation and operation of the firm’s system of quality management.
4. Complying with the requirements in other ASAs may provide information that is relevant to quality management at the engagement level. (Ref: Para. A12)
5. The public interest is served by the consistent performance of quality audit engagements through achieving the objective of this standard and other ASAs for each engagement. A quality audit engagement is achieved through planning and performing the engagement and reporting on it in accordance with Australian Auditing Standards and applicable legal and regulatory requirements. Achieving the objectives of those standards and complying with the requirements of applicable law or regulation involves exercising professional judgement and exercising professional scepticism.
6. In accordance with ASA 200,[2] the engagement team is required to plan and perform an audit with professional scepticism and to exercise professional judgement. Professional judgement is exercised in making informed decisions about the courses of action that are appropriate to manage and achieve quality given the nature and circumstances of the audit engagement. Professional scepticism supports the quality of judgements made by the engagement team and, through these judgements, supports the overall effectiveness of the engagement team in achieving quality at the engagement level. The appropriate exercise of professional scepticism may be demonstrated through the actions and communications of the engagement team. Such actions and communications may include specific steps to mitigate impediments that may impair the appropriate exercise of professional scepticism, such as unconscious bias or resource constraints. (Ref: Para. A33–A36)