Document ID: chunk:federal_register_of_legislation:F2023C01118:body:0:p73
Version: federal_register_of_legislation:F2023C01118
Segment Type: other
Provision Reference: 
Character Range: 214562–217598

of quality management provides the firm with reasonable assurance that the objectives of the system of quality management are being achieved.

A195.      This ASQM does not require the firm to obtain an independent assurance report on its system of quality management, or preclude the firm from doing so.

Taking Prompt and Appropriate Action and Further Communication (Ref: Para. 55)

A196.      In circumstances when the individual(s) assigned ultimate responsibility and accountability for the system of quality management reaches the conclusion described in paragraph 54(b) or 54(c), the prompt and appropriate action taken by the firm may include:

           * Taking measures to support the performance of engagements through assigning more resources or developing more guidance and to confirm that reports issued by the firm are appropriate in the circumstances, until such time as the identified deficiencies are remediated, and communicating such measures to engagement teams.

           * Obtaining legal advice.

A197.      In some circumstances the firm may have an independent governing body that has non-executive oversight of the firm. In such circumstances, communications may include informing the independent governing body.
A198.      Examples of circumstances when it may be appropriate for the firm to communicate to external parties about the evaluation of the system of quality management

           * When the firm belongs to a network.

           * When other network firms use the work performed by the firm, for example, in the case of a group audit.

           * When a report issued by the firm is determined by the firm to be inappropriate as a result of the failure of the system of quality management, and management or those charged with governance of the entity need to be informed.

           * When law or regulation requires the firm to communicate to an oversight authority or a regulatory body.

Performance Evaluations (Ref: Para. 56)

A199.      Periodic performance evaluations promote accountability. In considering the performance of an individual, the firm may take into account:

           * The results of the firm's monitoring activities for aspects of the system of quality management that relate to the responsibility of the individual. In some circumstances, the firm may set targets for the individual and measure the results of the firm's monitoring activities against those targets.

           * The actions taken by the individual in response to identified deficiencies that relate to the responsibility of that individual, including the timeliness and effectiveness of such actions.
Scalability examples to demonstrate how the firm may undertake the performance evaluations

      * In a less complex firm, the firm may engage a service provider to perform the evaluation, or the results of the firm's monitoring activities may provide an indication of the performance of the individual.

      * In a more complex firm, the performance evaluations may be undertaken