Monitoring
your Firm’s Quality Control
ST UA RT H A RT LEY FCA
FOCUSROI I N C
SHARTLEY@FOCUSROI.COM
Copyright FocusROI 2014
Quality Control Standards
• Pervasive - Firm Level - CSQC 1
◦ Deals with a firm's responsibilities for its system of quality control.
◦ Design of firm wide policies and procedures (Firms QAM)
• Specific - Engagement Level
◦ Audits - CAS 220
Implementing the firm’s quality control procedures at the
engagement level
◦ Reviews – to come…
ED issued in Canada in 2013
ISRE 2400 issued in fall 2012
Steps to Achieving QC
1.
Objectives:
What QC standards
need to be met?
Professional standards
Client service standards
2.
What systems are
needed to ensure we meet
the QC objectives
Develop QC P&P
Assign QC leaders
Implement a Firm QA manual
3.
Assess how well we
are doing today?
Monitor compliance with P&P
Update QAM
report upon results
4.
Identify what corrective
actions are required?
Annual updating of P&P
Design a plan to improve QA
Communicate/implement the plan
5.
Is QC continually
getting better
within Firm?
Is plan of action being followed?
Are the QC leaders doing a
good job?
Monitoring Requirement - CSQC 1.48
The firm
shall establish a monitoring process…
 At Firm Level
◦ ongoing consideration and evaluation of the firm's system of quality
control
Engagement Level
◦ on a cyclical basis, inspection of at least one completed engagement for
each engagement partner;
Two types of Monitoring
Has Firm complied with?
A bel & C
C PA, C
A
o
= Ongoing (yearly) monitoring
= Completed file (1-3 years)
monitoring
The Ongoing Monitor
Question
Response
What is the role?
An objective evaluation of compliance with firm
policies and procedures
Extent of involvement?
1. Read the firms QAM to assess if complete and up to
date
2. Review action plans and responses to prior year
monitoring reports and practice inspections
3. Make inquiries and review supporting documentation
of compliance with firms QAM
4. Discuss findings and issue an ongoing monitoring
report to managing partner
When?
Once every year
Who?
Suitably qualified person
Qualifications
Area to address
Consider
Competence
Good reputation. Previous monitoring experience. Senior person (ideally
partner equivalent) with relevant qualifications/experience and industry
knowledge
Character
High integrity
Chemistry
Compatible with firm culture and personnel
Commitment
Person is available when needed
Privacy
Information about the firm, staff and files will stay confidential. No direct
contacts with client
Independence
Complies with firm policies. No client conflicts
External
Obtain an engagement letter and inform insurance company
Fees
Fair. Billed to firm, not client
Ongoing Monitor’s Report
Compliance with the firm’s P&P
Content of Yearly Monitors Report (Aug 31?)
1. Firm QAM is relevant and up to date?
2. QC roles have been assigned and duties properly carried out?
3. Compliance with P&P in Firms QAM including client acceptance?
4. Independence issues were identified, addressed and
documented?
5. Annual QC improvement plan issued to partners/staff?
6. Corrective actions taken to address QC deficiencies identified
in previous action plans and monitors reports?
Comments
The Completed File Monitor
Question
Response
What is the role?
An objective evaluation of compliance with firm
policies and professional standards on a sample
of specific engagements.
Extent of
involvement?
1.
2.
3.
4.
Select files for review
Perform a general review of completed file
Identify specific file deficiencies and systematic
deficiencies for firm as a whole
Discuss findings and issue a monitoring report to
managing partner
When?
At least one completed file every three years
Who?
Suitably qualified and competent person NOT
involved in performing the engagement
Maintaining/Improving QC
Maintaining the System
Activity
Annually
monitor compliance
with firms QAM
Annually
assess need for
changes in firm’s QAM
Annual confirmation
(by all personnel)
of compliance
with firm’s QAM
Annually communicate
results of QC monitoring
to firm personnel
Purpose
Documentation
Ensure system is
operating effectively and
deficiencies are corrected
on a timely basis
Reports from firm leaders
Reports from firm monitors
Action plans to address
weaknesses
Ensure firm’s QAM
is relevant and
up to date
Details of the QAM review
and the changes (if any)
made as a result
Ensure personnel
understand and comply
with firm’s QAM
Signed confirmations
by all partners and staff
Details on how any issues
arising were resolved
Correct deficiencies
and ensure continual
improvement in quality
of work performed
Annual communication to
personnel with action plans
for remediation and
improvement
Overview of
Key features:
Four sample Quality Assurance Manuals
Guidance to help firms customize the sample manuals
Optional best practices sample policies in shaded text
Core chapters provide commentary on each sample
policy
The Annual QC Action Plan
CSQC 1.50
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.
Quality Improvement Action Plan
#
Nature of
Deficiency
Accounting for financial
1 instruments not properly
understood by staff
Staff appraisals not being
2 completed on regular
basis
3
4
Action step
Hold training a session for
partners and staff on the
accounting requirements
Remind partners of deadlines
for staff appraisals and follow
up to ensure compliance.
Priority
A,B,C.
Completion
date
Who Estimated
resp.
cost
A
6/30/2013
SH
2,500
B
5/15/2013
JK
Minimal
EQCR vs. Completed File Monitoring
Introducing FocusHGK
 Key Services
 Quality Control Monitoring
 Training and Coaching
 Practice Improvement
Description of Services
Description
Minimum
Completed File Monitoring
Review of one assurance file per Review of two assurance files (audit and
partner
review)
per partner and provide
recommendations
Review of annual report
Perform the review, prepare report and
provide recommendations
Engagements meeting the firm
Perform review for all higher risk
criteria
engagements within Firm
Review of annual plan
Prepare cost effective plan based on
findings from monitoring activities
Ongoing Monitoring
ECQR’s
QC Improvement Plans
Recommended
OTHER SERVICES
F/S Reviews

Review of F/S for selected engagements based on pre-determined criteria
Efficiency of Engagement
Workflow






Review of current practice and recommendations for changes.
Suggestions for revisions to Firm policies and procedures
Partner Staff coaching on productivity improvements
Annual refresher course for partners and staff.
Coaching aimed at understanding forms and complying with standards
Training directed at identified QC weaknesses and changes in standards
Small Group Training and
Coaching
Please contact us
for further
information
info@focusROI.com
416 594 0005