New Quality Management Standards
Amid growing stakeholder expectations and a need for quality management systems that are proactive and adaptable, three interrelated standards have been introduced to strengthen and modernize how firms approach quality management.
In January 2021, the Auditing and Assurance Standards Board (AASB) unanimously approved the suite of quality management standards.
CSQM 1 and CAS 220 replace:
- Canadian Standard on Quality Control (CSQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial statements, and Other Assurance Engagements
- CAS 220, Quality Control for an Audit of Financial Statements.
CSQM 2 is a new standard addressing the appointment and eligibility of engagement quality reviewers and their responsibilities when performing the engagement quality review (EQR).
How it impacts you?
Canadian practitioners performing any engagement addressed by standards in the Handbook.
Practitioners performing the following services will now be required to design and implement a quality system on quality management:
Timelines and implementation
- Firms are required to design and implement their quality system on quality management for audits and reviews of financial statements and other assurance engagements by December 15, 2022. They are required to evaluate their system within one year following this date.
- Firms are required to design and implement their quality system on quality management for related service engagements by December 15, 2023. They are required to evaluate their system within one year following this date.
How do I learn more?
Attend an upcoming CPA Alberta virtual seminar:
Quality Management - Impacts of CSQM 1 and 2 for Providers of Assurance Services (New Standards)
Quality Management - Impacts of CSQM 1 and 2 for Providers of Compilation and Other Non-Assurance Services (New Standards)
Quality Management - Overview of CSQM 1 and 2 for Providers of Assurance Services (New Standards)
Quality Management - Application of CSQM 1 and 2 for Providers of Assurance Services (New Standards)
Download additional resources and materials:
Resources from IFAC:
What’s New CSQM 1 and 2:
- CSQM 1 has more explicit requirements for the time when an EQR is required.
- CSQM 2 requirements address not only the eligibility and objectivity of the engagement quality reviewer, but also the qualifications of the individual(s) responsible for appointing the engagement quality reviewer.
- CSQM 2 requires a firm to establish policies or procedures for a cooling-off period of two years, or longer, if required by relevant ethical requirements, before the engagement partner can assume the role of engagement quality reviewer.
- CSQM 2 also addresses impairment of the engagement quality reviewer’s eligibility to perform the review. CSQM 2 requires the firm to establish robust policies or procedures regarding the performance of the EQR, including:
- that the EQR be performed at appropriate times during the engagement, rather than only before the sign off
- precluding the engagement partner from dating the engagement report until notification has been received from the engagement quality reviewer that the review is complete
- CSQM 2 recognizes circumstances when the engagement quality reviewer may use assistants such as an individual or team of individuals with relevant expertise or an individual external to the firm to perform the EQR.
- The standard requires the engagement quality reviewer to be responsible for the overall performance of the review, including determining the nature, timing and extent of the direction and supervision of assistants, and the review of their work. When using an individual external to the firm, the requirements in CSQM 1 addressing network requirements/services or services providers apply.
CAS 220 revisions:
CAS 220 has been revised to clarify and strengthen the key elements of quality management at the engagement level by:
- emphasizing that the engagement partner is responsible for managing and achieving quality at the engagement level
- clarifying the engagement partner’s responsibilities, and acknowledging the engagement partner can assign certain tasks/procedures to members of the engagement team appropriately skilled or suitably experienced in managing and achieving quality
- modernizing the standard for the evolving environment
CAS 220 introduces a stand-back requirement for the engagement partner. Prior to dating the auditor’s report, the engagement partner is to determine whether they have been appropriately and sufficiently involved throughout the audit and have a basis for determining that the significant judgments made and conclusions reached are appropriate given the nature and circumstances of the engagement.
- Audits and reviews of financial statements,
- Other assurance engagements
- Related services engagements (not previously affected)
- Canadian Standard on Related Services (CSRS) 4200, Compilation Engagements
- CSRS 4400, Agreed-Upon Procedures Engagements
- CSRS 4460, Reports on Supplementary Matters Arising from an Audit or a Review Engagement
- Other standards addressing association and consent
Services Not Affected:
- Other services a practitioner may offer, including tax and consulting.
I have more questions, who do I contact?
Advisory and consultation services are provided to designated accountants, candidates, and the public on a broad range of topics such as independence, conflict of interest, office management, Continuing Professional Development, accounting and assurance questions, and many others. This service is confidential, free of charge and is intended to provide only informal feedback.
If you have an advisory or consultation question, email firstname.lastname@example.org or call 403.299.1309 , or toll-free at 1.800.232.9406.