The Firm’s System of Quality ManagementThe Firm’s System of Quality Management

The Firm’s System of Quality Management

1. A system of quality management operates in a continual and iterative manner and is responsive to changes in the nature and circumstances of the firm and its engagements. It also does not operate in a linear manner. However, for the purposes of this ASQM, a system of quality management addresses the following eight components: (Ref: Para. A3)
   1. The firm’s risk assessment process;
   2. Governance and leadership;
   3. Relevant ethical requirements;
   4. Acceptance and continuance of client relationships and specific engagements;
   5. Engagement performance;
   6. Resources;
   7. Information and communication; and
   8. The monitoring and remediation process.
2. This ASQM requires the firm to apply a risk-based approach in designing, implementing and operating the components of the system of quality management in an interconnected and co-ordinated manner such that the firm proactively manages the quality of engagements performed by the firm. (Ref: Para. A4)
3. The risk-based approach is embedded in the requirements of this ASQM through:
   1. Establishing quality objectives. The quality objectives established by the firm consist of objectives in relation to the components of the system of quality management that are to be achieved by the firm. The firm is required to establish the quality objectives specified by this ASQM and any additional quality objectives considered necessary by the firm to achieve the objectives of the system of quality management.
   2. Identifying and assessing risks to the achievement of the quality objectives (referred to in this standard as quality risks). The firm is required to identify and assess quality risks to provide a basis for the design and implementation of responses.
   3. Designing and implementing responses to address the quality risks. The nature, timing and extent of the firm’s responses to address the quality risks are based on and are responsive to the reasons for the assessments given to the quality risks.
4. This ASQM requires that, at least annually, the individual(s) assigned ultimate responsibility and accountability for the system of quality management, on behalf of the firm, evaluates the system of quality management and concludes whether the system of quality management provides the firm with reasonable assurance that the objectives of the system, stated in paragraph 14(a) and (b), are being achieved. (Ref: Para. A5)

Scalability

1. [Deleted by the AUASB. Refer Aus 10.1]

Aus 10.1 In applying a risk-based approach, the firm is required to take into account: