Monitoring and self review

Key Points

  • Monitoring, including self review, is important for a practice to ensure its quality control system is up-to-date and operating effectively
  • Monitoring is required by the quality control standards APES 320 and ASQC 1
  • Tools are available here to assist practices self review their systems

Accounting practices need to monitor the effectiveness of their quality control system to confirm it is relevant and operates effectively. Changes to professional standards and regulatory and legal requirements need to be reflected in updated policies and procedures; training and development must be tracked; quality improvements must be made; and results of feedback mechanisms need to be communicated to partners and staff – with follow-up action taken.

As well as being required by APES 320 Quality Control for Firms /ASQC 1 Quality Control for Firms that Perform Audits and Reviews of Financial Reports, Other Financial Information and Other Assurance Engagements, monitoring is important as a matter of best practice. This is particularly important when there is a change in the practice’s structure or ownership, or in the types of services offered by the practice.

Monitoring is an on-going commitment, inherent in every aspect of professional work. Engagement partner file reviews, training and development and staff appraisals are all important aspects of monitoring on an on-going basis. A formal evaluation of the firm’s control system is also important, usually involving interviews, walkthrough tests and reviews of engagement files and other documentation relevant to the operation of the system, such as independence confirmations.

Monitoring also includes recommendations to improve the system, especially if weaknesses are detected or standards have changed.

If a practice has undergone an Institute quality review, this can be taken into account when determining the extent and frequency of self review required by the practice.

Tools

Article last updated 4 April 2012