Document ID: chunk:federal_register_of_legislation:F2023C01118:body:0:p65
Version: federal_register_of_legislation:F2023C01118
Segment Type: other
Provision Reference: 
Character Range: 190445–193488

a high degree of subjectivity. While the firm notes that these engagement teams are not exercising appropriate professional scepticism, the underlying root cause of this issue may relate to another matter, such as a cultural environment that does not encourage engagement team members to question individuals with greater authority or insufficient direction, supervision and review of the work performed on the engagements.

A169.      In addition to investigating the root cause(s) of identified deficiencies, the firm may also investigate the root cause(s) of positive outcomes as doing so may reveal opportunities for the firm to improve, or further enhance, the system of quality management.

Responding to Identified Deficiencies (Ref: Para. 42)

A170.      The nature, timing and extent of remedial actions may depend on a variety of other factors, including:

           * The root cause(s).

           * The severity and pervasiveness of the identified deficiency and therefore the urgency with which it needs to be addressed.

           * The effectiveness of the remedial actions in addressing the root cause(s), such as whether the firm needs to implement more than one remedial action in order to effectively address the root cause(s), or needs to implement remedial actions as interim measures until the firm is able to implement more effective remedial actions.

A171.      In some circumstances, the remedial action may include establishing additional quality objectives, or quality risks or responses may be added or modified, because it is determined that they are not appropriate.

A172.      In circumstances when the firm determines that the root cause of an identified deficiency relates to a resource provided by a service provider, the firm may also:

           * Consider whether to continue using the resource provided by the service provider.

           * Communicate the matter to the service provider.

    The firm is responsible for addressing the effect of the identified deficiency related to a resource provided by a service provider on the system of quality management and taking action to prevent the deficiency from recurring with respect to the firm's system of quality management. However, the firm is not ordinarily responsible for remediating the identified deficiency on behalf of the service provider or further investigating the root cause of the identified deficiency at the service provider.

Findings About a Particular Engagement (Ref: Para. 45)

A173.      In circumstances when procedures were omitted or the report issued is inappropriate, the action taken by the firm may include:

           * Consulting with appropriate individuals regarding the appropriate action.

           * Discussing the matter with management of the entity or those charged with governance.

           * Performing the omitted procedures.

    The actions taken by the firm do not relieve the firm of the responsibility to take further actions relating to the finding in the context of the system of quality