Document ID: chunk:federal_register_of_legislation:F2023C01118:body:0:p11
Version: federal_register_of_legislation:F2023C01118
Segment Type: other
Provision Reference: 
Character Range: 31461–34884

the application and other explanatory material, to understand the objective of this ASQM and to apply its requirements properly.

System of Quality Management

19.               The firm shall design, implement and operate a system of quality management. In doing so, the firm shall exercise professional judgement, taking into account the nature and circumstances of the firm and its engagements. The governance and leadership component of the system of quality management establishes the environment that supports the design, implementation and operation of the system of quality management. (Ref: Para. A30–A31)

Responsibilities

20.               The firm shall assign: (Ref: Para. A32–A35)

(a)                Ultimate responsibility and accountability for the system of quality management to the firm's chief executive officer or the firm's managing partner (or equivalent) or, if appropriate, the firm's managing board of partners (or equivalent);

(b)                Operational responsibility for the system of quality management;

(c)                Operational responsibility for specific aspects of the system of quality management, including:

(i)                 Compliance with independence requirements; and (Ref: Para. A36)

(ii)               The monitoring and remediation process.

21.               In assigning the roles in paragraph 20 the firm shall determine that the individual(s): (Ref: Para. A37)

(a)                Has the appropriate experience, knowledge, influence and authority within the firm, and sufficient time, to fulfill their assigned responsibility; and (Ref: Para. A38)

(b)                Understands their assigned roles and that they are accountable for fulfilling them.

22.               The firm shall determine that the individual(s) assigned operational responsibility for the system of quality management, compliance with independence requirements and the monitoring and remediation process, have a direct line of communication to the individual(s) assigned ultimate responsibility and accountability for the system of quality management.

The Firm's Risk Assessment Process

23.               The firm shall design and implement a risk assessment process to establish quality objectives, identify and assess quality risks and design and implement responses to address the quality risks. (Ref: Para. A39–A41)

24.               The firm shall 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. (Ref: Para. A42–A44)

25.               The firm shall identify and assess quality risks to provide a basis for the design and implementation of responses. In doing so, the firm shall:

(a)                Obtain an understanding of the conditions, events, circumstances, actions or inactions that may adversely affect the achievement of the quality objectives, including: (Ref: Para. A45–A47)

(i)                 With respect to the nature and circumstances of the firm, those relating to:

                   1. The complexity and operating characteristics of the firm;

                   2. The strategic and operational decisions and actions, business processes and business model of the firm;

                   3. The characteristics and management style of leadership;

                   4. The resources of the firm, including