Document ID: chunk:federal_register_of_legislation:F2023C01118:body:0:p6
Version: federal_register_of_legislation:F2023C01118
Segment Type: other
Provision Reference: 
Character Range: 16690–19888

process;

(b)                Governance and leadership;

(c)                Relevant ethical requirements;

(d)                Acceptance and continuance of client relationships and specific engagements;

(e)                Engagement performance;

(f)                 Resources;

(g)                Information and communication; and

(h)                The monitoring and remediation process.

7.                   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)

8.                   The risk-based approach is embedded in the requirements of this ASQM through:

(a)                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.

(b)                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.

(c)                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.

9.                   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

10.               [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:

(a) The nature and circumstances of the firm; and

(b) The nature and circumstances of the engagements performed by the firm.

Accordingly, the design of the firm's system of quality management, in particular the complexity and formality of the system, will vary. For example, a firm that performs different types of engagements for a wide variety of entities, including audits of financial reports of listed entities, will likely need to have a more complex and formalised system of quality management and supporting documentation, than a firm that performs only reviews of financial reports or agreed-upon procedures engagements.

Networks and Service Providers

11.               This ASQM addresses the firm's responsibilities when the firm:

(a)                Belongs to a network, and the firm