From December 2022 professional assurance firms were required to comply with new quality management standards. To help firms meet these standards we created a suite of dynamic workpapers, based on the 'Pro-forma toolkit: Audit Quality Management' for small and medium firms produced by CAANZ.
Some elements are already built into individual jobs (or will be updated as we roll out our new templates). We have added root cause analysis tools, deadlines, rollover and review capabilities, hyperlinks to the relevant standards and of course, the tools sit within the Audit Assistant application where they are easy to access by partners and staff.
The tools are designed for small to medium assurance firms, including sole practitioners (there is a specific version for sole practitioners with no staff).
Audit Quality Management Tool:
Under PES 3 assurance firms must have a Quality Management Manual. This is the primary part of the toolkit.
- It is designed for annual rollover and update.
- The date is set to the end of the current year (It makes sense to use the 30 June year to correspond with the annual CPD requirements as these are recorded for each staff member in this tool.)
- Staff members should all be added to this job so that they can be familiar with the Quality Management Manual and update their own records where applicable.
- All the parts may be customised to suit the firm, and customisation remains on rollover.
Document templates include:
- Business Description and Philosophy
- Risk Assessment Process Policy
- Risk Assessment
- Governance and Leadership Policy Statement
- Relevant Ethical Requirements Policy Statement
- Acceptance and Continuance of Client Relationships and Specific Engagements Policy
- Engagement Performance Policy Statement
- Resources Policy Statement
- Information and Communication Policy Statement
- Monitoring and Remediation Policy Statement
There are also workpapers as follows:
- Assignment of Responsibilities
- Annual Independence Confirmation (each staff member to complete, with independence resolution memorandums to complete if an issue is raised)
- Training and development records (each staff member must update their own)
- Client complaint records (a copy to be completed in each instance of a complaint made)
- Using expert's work (a list of approved experts to consult if necessary) NOTE - this is also available in a stand-alone format if confidentiality is required
- Technology acquisition forms (to ensure due diligence is completed and recorded)
- New service provider forms (to ensure due diligence is completed and recorded)
- Culture quality assessment checklist (for a recorded assessment of work culture during the year)
- Annual system evaluation (a formal annual evaluation resulting in a written formal report)
- Root cause analysis and remedial actions (a separate version is created when a fault is identified, and a root cause analysis interview record is created if a staff member's input or response is required, plus a remedial action plan is created for each issue) NOTE - this is also available in a stand-alone format if confidentiality is required
New Assurance Client Tool:
A tool for the screening and induction of new clients.
- Enter the date as the date when the client was assessed
- This is a one-off job used for initial induction.
Pages include:
- New client screening questions
- New client background information
- New client acceptance checklist
- New client independence confirmation (multiple versions may be created for all relevant staff to sign off their independence)
- Welcome letter
- Ethical clearance letter (to prior assurance practitioner).
Client Exit Tool:
A tool for processing departing clients.
- The date is when the client is removed from the firm.
Pages include:
- Lost client form (describing reasons for departure and creation of disengagement letter)
- Checklist for updating records and ensuring all exit processes are followed.
Staff Recruitment, Orientation and Review Tool:
A tool to maintain records of staff recruitment, orientation and review process. There are versions for professional and administrative staff.
- The date entered may be the date of the interview, later updated to the appointment date if appropriate
- The client's name is the name of the interviewee/ staff member.
Pages include:
- A proforma job description document
- A candidate interview and evaluation checklist
- A reference check workpaper (a new version is made for each reference)
- A summary of the offer, and a place for the employment contract to be attached
- New staff orientation checklist
- Performance review workpaper (a new version created for each review).
- Note: to retain confidentiality make sure the security setting 'Only see assigned jobs' is selected and the staff member should not be assigned to the file.
Client Complaint Process Tool:
For use in processing client complaints in terms of the Quality Management Manual if not to be included as part of the manual for confidentiality reasons.
- Set name as the name of the client
- Set the date at as date the complaint was received.
System Evaluation, Root Cause Analysis and Remediation Process Tool:
For use in carrying out annual and informal system evaluations, identifying the root cause of deficiencies and actions to be taken, including staff interviews in terms of the Quality Management Manual (if not to be included as part of the manual for confidentiality reasons).
- Designed for annual rollover and update
- Set the date to the end of the current year.
Annual Updates Required
PES 3 Para 53 says "The individual(s) assigned ultimate responsibility and accountability for the system of quality management shall evaluate, on behalf of the firm, the system of quality management. The evaluation shall be undertaken as of a point in time, and performed at least annually."
In our Audit Quality Management Tool we address paragraph 53 at page C2 Annual System Evaluation, but this also covers paragraphs 54 and 55 and asks "Is there evidence that the individual assigned ultimate responsibility for the system of quality management in the firm has communicated at least annually to appropriate management and others regarding the monitoring procedures performed over the past year, conclusions drawn from such procedures, and a description of any systemic, repetitive or other significant deficiencies found and action taken to resolve such deficiencies?"
You will be able to tick this off as yes if you have reviewed the quality management documentation annually after rolling it over. The process of bringing forward the template while signing it off as the individual assigned ultimate responsibility for the system of quality management meets this in my opinion. So if you do the evaluation as at your annual review date (after rolling over) your initials on the bring forward items meet this requirement in my opinion.
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The Assignment of Responsibilities page includes: “The firm’s directors will carry out a periodic evaluation of the individuals assigned ultimate responsibility and accountability for and operational responsibility for the SoQM before signing off the annual review, and this will be documented in the QM manual.”
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On the Annual System Evaluation if there is an issue raised at 2.1 there is a prompt to “Note issue and carry out a root cause analysis per C4 - Root Cause and Remedial Actions [details] and make appropriate responses and adjustments.
- On A1 there is a place to: “Enter the planned date for the next annual update and review.”
NOTE: In terms of the licencing agreement with CAANZ this tool is only available to CAANZ members.