Document ID: chunk:federal_register_of_legislation:F2023C01118:body:0:p71
Version: federal_register_of_legislation:F2023C01118
Segment Type: other
Provision Reference: 
Character Range: 209032–212063

the system of quality management.

Concluding on the System of Quality Management (Ref: Para. 54)

A190.      In the context of this ASQM, it is intended that the operation of the system as a whole provides the firm with reasonable assurance that the objectives of the system of quality management are being achieved. In concluding on the system of quality management, the individual(s) assigned ultimate responsibility and accountability for the system of quality management may, in using the results of the monitoring and remediation process, consider the following:

           * The severity and pervasiveness of identified deficiencies, and the effect on the achievement of the objectives of the system of quality management;

           * Whether remedial actions have been designed and implemented by the firm, and whether the remedial actions taken up to the time of the evaluation are effective; and

           * Whether the effect of identified deficiencies on the system of quality management have been appropriately corrected, such as whether further actions have been taken in accordance with paragraph 45.

A191.      There may be circumstances when identified deficiencies that are severe (including identified deficiencies that are severe and pervasive) have been appropriately remediated and the effect of them corrected at the point in time of the evaluation. In such cases, the individual(s) assigned ultimate responsibility and accountability for the system of quality management may conclude that the system of quality management provides the firm with reasonable assurance that the objectives of the system of quality management are being achieved.

A192.      An identified deficiency may have a pervasive effect on the design, implementation and operation of the system of quality management when, for example:

           * The deficiency affects several components or aspects of the system of quality management.

           * The deficiency is confined to a specific component or aspect of the system of quality management, but is fundamental to the system of quality management.

           * The deficiency affects several business units or geographical locations of the firm.

           * The deficiency is confined to a business unit or geographical location, but the business unit or location affected is fundamental to the firm overall.

           * The deficiency affects a substantial portion of engagements that are of a certain type or nature.
Example of an identified deficiency that may be considered severe but not pervasive

The firm identifies a deficiency in a smaller regional office of the firm. The identified deficiency relates to non-compliance with many firm policies or procedures. The firm determines that the culture in the regional office, particularly the actions and behaviour of leadership in the regional office which were overly focused on financial priorities, has contributed to the root cause of the identified deficiency. The firm determines that the effect of the