PSQC
Philippine Standard on Quality Control
Function of PSQC
deals with a firm's responsibilities for its system of quality control for audits and reviews of financial statements, and other assurance and related services engagements
PSA 220
deals with quality control procedures for audits of financial statements.
system of quality control
consists of policies designed to achieve the objective(A. the firm and is personnel comply with professional standards and regulatory and legal reqmts. B. reports issued by the firm or engagement partners are appropriate in the circumstances) and the procedures necessary to implement and monitor compliance with those policies
Application of PSQC
applies to all firms of professional accountants in respect of audits and reviews of financial statements, and other assurance and related services engagements
guidance
is relevant to the proper application of the requirements. The application and other explanatory material may also provide background information on matters addressed in this PSQC.
Effectivity date
December 15, 2009
objective of firm
establish and maintain a system of quality control to provide it with reasonable assurance that:
(a) The firm and its personnel comply with professional standards and regulatory and legal requirements; and
(b) Reports issued by the firm or engagement partners are appropriate in the circumstances.
Date of Report
The date selected by the practitioner to date the report
Engagement documentation
The record of work performed, results obtained, and conclusions the practitioner reached (terms such as "working papers" or "workpapers" are sometimes used).
Engagement partner2
The partner or other person in the firm who is responsible for the engagement and its performance, and for the report that is issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body.
Engagement quality control review
A process designed to provide an objective evaluation, on or before the date of the report, of the significant judgments the engagement team made and the conclusions it reached in formulating the report.
review process is for audits of financial statements of listed entities, and those other engagements, if any, for which the firm has determined an engagement quality control review is required.
Engagement quality control reviewer
A partner, other person in the firm, suitably qualified external person, or a team made up of such individuals, none of whom is part of the engagement team, with sufficient and appropriate experience and authority to objectively evaluate the significant judgments the engagement team made and the conclusions it reached in formulating the report.
Engagement team
All partners and staff performing the engagement, and any individuals engaged by the firm or a network firm who perform procedures on the engagement. This excludes external experts engaged by the firm or a network firm
Firm
A sole practitioner, partnership or other entity of professional accountants
Inspection
In relation to completed engagements, procedures designed to provide evidence of compliance by engagement teams with the firm's quality control policies and procedures
Listed entity
An entity whose shares, stock or debt are quoted or listed on a
recognized stock exchange, or are marketed under the regulations of a recognized stock exchange or other equivalent body
Monitoring
A process comprising an ongoing consideration and evaluation of the firm's system of quality control, including a periodic inspection of a selection of completed engagements, designed to provide the firm with reasonable assurance that its system of quality control is operating effectively.
Network firm
A firm or entity that belongs to a network
Network
A larger structure:
(i) That is aimed at cooperation, and
(ii) That is clearly aimed at profit or cost-sharing or shares common ownership, control or management, common quality control policies and procedures, common business strategy, the use of a common brand name, or a significant part of professional resources.
Partner
Any individual with authority to bind the firm with respect to the performance of a professional services engagement.
Personnel
Partners and staff
Professional Standards
AASC Engagement Standards, as defined in the AASC's Preface to the Philippine Standards on Quality Control, Auditing, Review, Other Assurance and Related Services, and relevant ethical requirements.
Reasonable assurance
In the context of this PSQC, a high, but not absolute, level of assurance.
Relevant ethical requirements
Ethical requirements to which the engagement team and engagement quality control reviewer are subject, which ordinarily comprise Parts A and B of the Code of Ethics for Professional Accountants in the Philippines (Philippine Ethics Code) together with national requirements that are more restrictive.
Staff
Professionals, other than partners, including any experts the firm employs
(s) Suitably qualified external person
An individual outside the firm with the competence and capabilities to act as an engagement partner, for example a partner
of another firm, or an employee
(l) of either a professional accountancy body whose members may perform audits and reviews of historical financial information, or other assurance or related services engagements, or of an organization that provides relevant quality control services.
Applying, Complying with, Relevant Requirements
QC Personnel shall have an understanding of PSQC.
they shall comply unless some are irrelevant
Elements of PSQC
HARLEM
(a) Leadership responsibilities for quality within the firm.
(b) Relevant ethical requirements.
(c) Acceptance and continuance of client relationships and specific engagements.
(d) Human resources.
(e) Engagement performance.
(f) Monitoring.
Documentation
firm shall document its policies and procedures and communicate them to the firm's personnel.
Leadership Responsibilities for Quality within the Firm
-promote an internal culture recognizing that quality is essential in performing engagements.
-shall require the firm's CEO/Mng partner assume ultimate responsibility for the firm's system of quality control
-so that the person assigned by CEO/Managing partner has sufficient and appropriate experience
Leadership Responsibilities for Quality within the Firm- explanatory
-recognize that the firm's business strategy is subject to the overriding requirement for the firm to achieve quality in all the engagements that the firm performs
Requirement:;
(a) Perform work that complies with professional standards and regulatory and legal requirements; and
(b) Issue reports that are appropriate in the circumstances.
(LR)Promoting of internal controls
(a) Establishment of policies and procedures that address performance evaluation, compensation, and promotion (including incentive systems) with regard to its personnel, in order to demonstrate the firm's overriding commitment to quality;
(b) Assignment of management responsibilities so that commercial considerations do not override the quality of work performed; and
(c) Provision of sufficient resources for the development, documentation and support of its quality control policies and procedures.
Relevant Ethical Requirements
personnel comply with relevant ethical requirements
(RER) Fundamental Principles of professional ethics
(a) Integrity;
(b) Objectivity;
(c) Professional competence and due care;
(d) Confidentiality; and
(e) Professional behavior.
(RER) reinforcement of fundamental principles
• The leadership of the firm;
• Education and training;
• Monitoring; and
• A process for dealing with non-compliance.
(RER) firm
(a) A sole practitioner or partnership of professional accountants;
(b) An entity that controls such parties through ownership, management or other means; and
(c) An entity controlled by such parties through ownership, management or other means.
(RER) Written confirmation
- at least annually
-paper/electronic
-firm demonstrates the importance that it attaches to independence and
makes the issue current for, and visible to, its personnel
(RER) Familiarity Threat
created by using the same senior personnel on an assurance engagement over a long period of time
(RER) Criteria to address familiarity threat
• The nature of the engagement, including the extent to which it involves a matter of public interest; and
• The length of service of the senior personnel on the engagement
(RER) relevance of familiarity threat in fs audits of listed company
Philippine Ethics Code requires the rotation of the key audit partner after a pre-defined period, normally no more than five years, and provides related standards and guidance.
(RER) Considerations specific to public sector audit organizations
-threats to independence still exist regardless of any statutory measures. so the public sector auditor may have regard to the public sector mandate and address any threats to independence in that context
-firm determines, based on its quality control policies and procedures, that a public sector entity is significant for the purposes of expanded quality control procedures.
-legislation may establish the appointments and terms of office of the auditor with engagement partner responsibility. As a result, it may not be possible to comply strictly with the engagement partner rotation requirements envisaged for listed entities
Independence
establish policies and procedures designed to provide it with reasonable assurance that the firm, its personnel and, where applicable, others subject to independence requirements (including network firm personnel) maintain independence where required by relevant ethical requirements
Independence enable the firm to
(a) Communicate its independence requirements to its personnel and, where applicable, others subject to them; and
(b) Identify and evaluate circumstances and relationships that create threats to independence, and to take appropriate action to eliminate those threats or reduce them to an acceptable level by applying safeguards, or, if considered appropriate, to withdraw from the engagement, where withdrawal is permitted by law or regulation
Independence require
(a) Engagement partners to provide the firm with relevant information about client engagements, including the scope of services, to enable the firm to evaluate the overall impact, if any, on independence requirements;
(b) Personnel to promptly notify the firm of circumstances and relationships that create a threat to independence so that appropriate action can be taken; and
(c) The accumulation and communication of relevant information to appropriate personnel so that:
(i) The firm and its personnel can readily determine whether they satisfy independence requirements;
(ii) The firm can maintain and update its records relating to independence; and
(iii) The firm can take appropriate action regarding identified threats to independence that are not at an acceptable level.
Breaching of Independence
(a) Personnel to promptly notify the firm of independence breaches of which they become aware;
(b) The firm to promptly communicate identified breaches of these policies and procedures to:
(i) The engagement partner who, with the firm, needs to address the breach; and
(ii) Other relevant personnel in the firm and, where appropriate, the network, and those subject to the independence requirements who need to take appropriate action; and
(c) Prompt communication to the firm, if necessary, by the engagement partner and the other individuals referred to in subparagraph (b)(ii) of the actions taken to resolve the matter, so that the firm can determine whether it should take further action. (Ref: Para. A10)
(RER) firm shall establish policies
(a) Setting out criteria for determining the need for safeguards to reduce the familiarity threat to an acceptable level when using the same senior personnel on an assurance engagement over a long period of time; and
(b) Requiring, for audits of financial statements of listed entities, the rotation of the engagement partner and the individuals responsible for engagement quality control review, and where applicable, others subject to rotation requirements, after a specified period in compliance with relevant ethical requirements. (Ref: Para. A10, A12-A17)
Acceptance and Continuance of Client Relationships and Specific Engagements
to provide the firm with reasonable assurance that it will only undertake or continue relationships and engagements where the firm:
(a) Is competent to perform the engagement and has the capabilities, including time and resources, to do so; (Ref: Para. A18, A23)
(b) Can comply with relevant ethical requirements; and
(c) Has considered the integrity of the client, and does not have information that would lead it to conclude that the client lacks integrity.
(ACCRSC) Competence, capabilities, and resources
involves reviewing the specific requirements of the engagement and the existing partner and staff profiles at all relevant levels, and including whether:
• Firm personnel have knowledge of relevant industries or subject matters;
• Firm personnel have experience with relevant regulatory or reporting requirements, or the ability to gain the necessary skills and knowledge effectively;
• The firm has sufficient personnel with the necessary competence and capabilities;
• Experts are available, if needed;
• Individuals meeting the criteria and eligibility requirements to perform engagement quality control review are available, where applicable; and
• The firm is able to complete the engagement within the reporting deadline.
(ACCRSC) Integrity of Client
-the knowledge of integrity will grown w/n the context of ongoing relationship with that client
example:
• The identity and business reputation of the client's principal owners, key management, and those charged with its
governance.
• The nature of the client's operations, including its business practices.
• Information concerning the attitude of the client's principal owners, key management and those charged with its governance towards such matters as aggressive interpretation of accounting standards and the internal control environment.
• Whether the client is aggressively concerned with maintaining the firm's fees as low as possible.
• Indications of an inappropriate limitation in the scope of work.
• Indications that the client might be involved in money laundering or other criminal activities.
• The reasons for the proposed appointment of the firm and non-reappointment of the previous firm.
• The identity and business reputation of related parties.
(ACCRSC) Sources of knowledge of Client's integrity
• Communications with existing or previous providers of professional accountancy services to the client in accordance with relevant ethical requirements, and discussions with other third parties.
• Inquiry of other firm personnel or third parties such as bankers, legal counsel and industry peers.
• Background searches of relevant databases.
(ACCRSC) Continuance of Client Relationship
consider factors from past or current engagement,and their implications
(ACCRSC) Withdrawal of Client Relationship
• Discussing with the appropriate level of the client's management and those charged with its governance the appropriate action that the firm might take based on the relevant facts and circumstances.
• If the firm determines that it is appropriate to withdraw, discussing with the appropriate level of the client's management and those charged with its governance withdrawal from the engagement or from both the engagement and the client relationship, and the reasons for the withdrawal.
• Considering whether there is a professional, regulatory or legal requirement for the firm to remain in place, or for the firm to report the withdrawal from the engagement, or from both the engagement and the client relationship, together with the reasons for the withdrawal, to regulatory authorities.
• Documenting significant matters, consultations, conclusions and the basis for the conclusions.
Human Resources
provide it with reasonable assurance that it has sufficient personnel with the competence, capabilities, and commitment to ethical principles necessary to:
(a) Perform engagements in accordance with professional standards and regulatory and legal requirements; and
(b) Enable the firm or engagement partners to issue reports that are appropriate in the circumstances.
(HR) Assignment of Engagement Teams
assign responsibility for each engagement to an engagement partner and shall establish policies and procedures requiring that:
(a) The identity and role of the engagement partner are communicated to key members of client management and those charged with governance;
(b) The engagement partner has the appropriate competence, capabilities, and authority to perform the role; and
(c) The responsibilities of the engagement partner are clearly defined and communicated to that partner.
(HR) Issues
• Recruitment.
• Performance evaluation.
• Capabilities, including time to perform assignments.
• Competence.
• Career development.
• Promotion.
• Compensation.
• The estimation of personnel needs.
(HR) Competence development
• Professional education.
• Continuing professional development, including training.
• Work experience.
• Coaching by more experienced staff, for example, other members of the engagement team.
• Independence education for personnel who are required to be independent.
(HR) Steps a firm may take in developing and maintaining competence and commitment
• Making personnel aware of the firm's expectations regarding performance and ethical principles;
• Providing personnel with evaluation of, and counseling on, performance, progress and career development; and
• Helping personnel understand that advancement to positions of greater responsibility depends, among other things, upon performance quality and adherence to ethical principles, and that failure to comply with the firm's policies and procedures may result in disciplinary action.
(HR) Consideration specific to smaller firms
The size and circumstances of the firm will influence the structure of the firm's performance evaluation process. Smaller firms, in particular, may employ less formal methods of evaluating the performance of their personnel.
Assignment of Engagement Teams
assign responsibility for each engagement to an engagement partner and shall establish policies and procedures requiring that:
(a) The identity and role of the engagement partner are communicated to key members of client management and those charged with governance;
(b) The engagement partner has the appropriate competence, capabilities, and authority to perform the role; and
(c) The responsibilities of the engagement partner are clearly defined and communicated to that partner.
assign personnel with the necessary competence and capabilities to do the 2 objectives
Engagement Team assignment/level of assurance
consideration of the engagement team's:
• Understanding of, and practical experience with, engagements of a similar nature and complexity through appropriate training and participation;
• Understanding of professional standards and regulatory and legal requirements;
• Technical knowledge and expertise, including knowledge of relevant information technology;
• Knowledge of relevant industries in which the clients operate;
• Ability to apply professional judgment; and
• Understanding of the firm's quality control policies and procedures.
Engagement Performance
to provide it with reasonable assurance that engagements are performed according to the 2 objectives:
(a) Matters relevant to promoting consistency in the quality of engagement performance;
(b) Supervision responsibilities;
(c) Review responsibilities.
(EP) Matters relevant to consistency
• How engagement teams are briefed on the engagement to obtain an understanding of the objectives of their work.
• Processes for complying with applicable engagement standards.
• Processes of engagement supervision, staff training and coaching.
• Methods of reviewing the work performed, the significant judgments made and the form of report being issued.
• Appropriate documentation of the work performed and of the timing and extent of the review.
• Processes to keep all policies and procedures current.
(EP) Supervision
• Tracking the progress of the engagement;
• Considering the competence and capabilities of individual members of the engagement team, whether they have sufficient time to carry out their work, whether they understand their instructions and whether the work is being carried out in accordance with the planned approach to the engagement;
• Addressing significant matters arising during the engagement, considering their significance and modifying the planned approach appropriately; and
• Identifying matters for consultation or consideration by more experienced engagement team members during the engagement
(EP) Review
• The work has been performed in accordance with professional standards and regulatory and legal requirements;
• Significant matters have been raised for further consideration;
• Appropriate consultations have taken place and the resulting conclusions have been documented and implemented;
• There is a need to revise the nature, timing and extent of work performed;
• The work performed supports the conclusions reached and is appropriately documented;
• The evidence obtained is sufficient and appropriate to support the report; and
• The objectives of the engagement procedures have been achieved.
(EP)Consultation
to provide it with reasonable assurance that:
(a) Appropriate consultation takes place on difficult or contentious matters;
(b) Sufficient resources are available to enable appropriate consultation to take place;
(c) The nature and scope of, and conclusions resulting from, such consultations are documented and are agreed by both the individual seeking consultation and the individual consulted; and
(d) Conclusions resulting from consultations are implemented.
(EP) EQCR requirements
requiring, for appropriate engagements, an engagement quality control review
shall:
(a) Require an engagement quality control review for all audits of financial statements of listed entities;
(b) Set out criteria against which all other audits and reviews of historical financial information and other assurance and related services engagements shall be evaluated to determine whether an engagement quality control review should be performed; and
(c) Require an engagement quality control review for all engagements, if any, meeting the criteria established in compliance with subparagraph (b).
(EP) EQCR requirements-Criteria for an EQCR
• The nature of the engagement, including the extent to which it involves a matter of public interest.
• The identification of unusual circumstances or risks in an engagement or class of engagements.
• Whether laws or regulations require an engagement quality control review.
(EP) EQCR- nature, timing, extent
setting out the nature, timing and extent of an engagement quality control review. Such policies and procedures shall require that the engagement report not be dated until the completion of the engagement quality control review
A42. The engagement report is not dated until the completion of the engagement quality
control review. However, documentation of the engagement quality control review may be completed after the date of the report.
A43. Conducting the engagement quality control review in a timely manner at appropriate stages during the engagement allows significant matters to be promptly resolved to the engagement quality control reviewer's satisfaction on or before the date of the report.
A44. The extent of the engagement quality control review may depend, among other things, on the complexity of the engagement, whether the entity is a listed entity, and the risk that the report might not be appropriate in the circumstances. The performance of an engagement quality control review does not reduce the responsibilities of the engagement partner.
(EP) EQCR 3
require the eqcr to include:
(a) Discussion of significant matters with the engagement partner;
(b) Review of the financial statements or other subject matter information and the proposed report;
(c) Review of selected engagement documentation relating to significant judgments the engagement team made and the conclusions it reached; and
(d) Evaluation of the conclusions reached in formulating the report and consideration of whether the proposed report is appropriate.
(EP) EQCR -Criteria for the Eligibility of reviewers
-sufficient and appropriate technical expertise, experience, authority
to address the appointment of engagement quality control reviewers and establish their eligibility through:
(a) The technical qualifications required to perform the role, including the necessary experience and authority; and (Ref: Para. A47)
(b) The degree to which an engagement quality control reviewer can be consulted on the engagement without compromising the reviewer's objectivity. (Ref: Para. A48)
-to maintain the objectivity of the engagement quality control reviewer.
- replacement if unable to perform an objective review
(EP) EQCR -listed company
(a) The engagement team's evaluation of the firm's independence in relation to the specific engagement;
(b) Whether appropriate consultation has taken place on matters involving differences of opinion or other difficult or contentious matters, and the conclusions arising from those consultations; and
(c) Whether documentation selected for review reflects the work performed in relation to the significant judgments made and supports the conclusions reached.
(EP) EQCR -listed company/other companies- other matters
• Significant risks identified during the engagement and the responses to those risks.
• Judgments made, particularly with respect to materiality and significant risks.
• The significance and disposition of corrected and uncorrected misstatements identified during the engagement.
• The matters to be communicated to management and those charged with governance and, where applicable, other parties such as regulatory bodies.
(EP) EQCRr- Objectivity
• Where practicable, is not selected by the engagement partner;
• Does not otherwise participate in the engagement during the period of review;
• Does not make decisions for the engagement team; and
• Is not subject to other considerations that would threaten the reviewer's objectivity.
(EP) EQCR- public sector
a statutorily appointed auditor may act in a role equivalent to that of engagement partner with overall responsibility for public sector audits.
(EP) EQCR- Documentation
require documentation that:
(a) The procedures required by the firm's policies on engagement quality control review have been performed;
(b) The engagement quality control review has been completed on or before the date of the report; and
(c) The reviewer is not aware of any unresolved matters that would cause the reviewer to believe that the significant judgments the engagement team made and the conclusions it reached were not appropriate.
(EP) Engagement Documentation-completion of the assembly of final eng. files
-complete the assembly of final engagement files on a timely basis after the engagement reports have been finalized(not be more thant 50 days after the date of auditor's report).
-if two or more different reports with same subject, it is treated as separate engagements
(EP) EQCR-Differences of Opinion
(a) Conclusions reached be documented and implemented; and
(b) The report not be dated until the matter is resolved.
(EP) Engagement Documentation- confidentiality, safe custody, integrity, accessibility and retrievability
-observe at all times the confidentiality of information unless specific client authority has been given
-Controls to prevent unauthorized alteration;
• Enable the determination of when and by whom engagement documentation was created, changed or reviewed;
• Protect the integrity of the information at all stages of the engagement, especially when the information is shared within the engagement team or transmitted to other parties via the Internet;
• Prevent unauthorized changes to the engagement documentation; and
• Allow access to the engagement documentation by the engagement team and other authorized parties as necessary to properly discharge their responsibilities.
(EP) Engagement Documentation- CONTROLS for confidentiality, safe custody, integrity, accessibility and retrievability
• The use of a password among engagement team members to restrict access to electronic engagement documentation to authorized users.
• Appropriate back-up routines for electronic engagement documentation at appropriate stages during the engagement.
• Procedures for properly distributing engagement documentation to the team members at the start of the engagement, processing it during engagement, and collating it at the end of engagement.
• Procedures for restricting access to, and enabling proper distribution and confidential storage of, hardcopy engagement documentation.
- generate, integrate, enable scan copies
(EP) Engagement Documentation- retention
-vary with the nature of engagement and firm's circumstances
-the retention period would ordinarily be no shorter than seven years* from the date of the auditor's report, or, if later, the date of the group auditor's report.
(EP) Engagement Documentation-ownership
Unless otherwise specified by law or regulation, engagement documentation is the property of the firm. The firm may, at its discretion, make portions of, or extracts from, engagement documentation available to clients, provided such disclosure does not undermine the validity of the work performed, or, in the case of assurance engagements, the independence of the firm or its personnel.
Monitoring
-policies and procedures relating to the system of quality control are relevant, adequate, and operating effectively. This process shall:
to provide an evaluation of:
• Adherence to professional standards and regulatory and legal requirements;
• Whether the system of quality control has been appropriately designed and effectively implemented; and
• Whether the firm's quality control policies and procedures have been appropriately applied, so that reports that are issued by the firm or engagement partners are appropriate in the circumstances.
(M) inspection process
selection of individual engagements, some of which may be selected without prior notification to the engagement team. In determining the scope of the inspections, the firm may take into account the scope or conclusions of an independent
(M) matters
(a) Include an ongoing consideration and evaluation of the firm's system of quality control including, on a cyclical basis, inspection of at least one completed engagement for each engagement partner;
(b) Require responsibility for the monitoring process to be assigned to a partner or partners or other persons with sufficient and appropriate experience and authority in the firm to assume that responsibility; and
(c) Require that those performing the engagement or the engagement quality control review are not involved in inspecting the engagements.
(M) matters- a
• Analysis of:
o New developments in professional standards and regulatory and legal requirements, and how they are reflected in the firm's policies and procedures where appropriate;
o Written confirmation of compliance with policies and procedures on independence;
o Continuing professional development, including training; and
o Decisions related to acceptance and continuance of client relationships and specific engagements.
• Determination of corrective actions to be taken and improvements to be made in the system, including the provision of feedback into the firm's policies and procedures relating to education and training.
• Communication to appropriate firm personnel of weaknesses identified in the system, in the level of understanding of the system, or compliance with it.
• Follow-up by appropriate firm personnel so that necessary modifications are promptly made to the quality control policies and procedures.
(M) Communication of Deficiencies
The reporting of identified deficiencies to individuals other than the relevant engagement partners need not include an identification of the specific engagements concerned, although there may be cases where such identification may be necessary for the proper discharge of the responsibilities of the individuals other than the engagement partners.
(M) smaller firms
may need to be performed by individuals who are responsible for design and implementation of the firm's quality control policies and procedures, or who may be involved in performing the engagement quality control review.
-choose suitably qualified external person or another firm to carry out engagement inspections and other monitoring procedures
(M) part of network- operate with own monitoring procedure
-network basis
(M) Deficiencies
evaluate the effect of deficiencies noted as a result of the monitoring process and determine whether they are either:
(a) Instances that do not necessarily indicate that the firm's system of quality control is insufficient to provide it with reasonable assurance that it complieswith professional standards and regulatory and legal requirements, and that the reports issued by the firm or engagement partners are appropriate in the circumstances; or
(b) Systemic, repetitive or other significant deficiencies that require prompt corrective action.
(M) Investigation
partner supervising the investigation may involve legal counsel as necessary
(M) communication
53. The firm shall communicate at least annually the results of the monitoring of its system of quality control to engagement partners and other appropriate individuals within the firm, including the firm's chief executive officer or, if appropriate, its managing board of partners. This communication shall be sufficient to enable the firm and these individuals to take prompt and appropriate action where necessary in accordance with their defined roles and responsibilities. Information communicated shall include the following:
(a) A description of the monitoring procedures performed.
(b) The conclusions drawn from the monitoring procedures.
(c) Where relevant, a description of systemic, repetitive or other significant deficiencies and of the actions taken to resolve or amend those deficiencies.
(M) operate- under common monitoring policies
require that:
(a) At least annually, the network communicate the overall scope, extent and results of the monitoring process to appropriate individuals within the network firms; and
(b) The network communicate promptly any identified deficiencies in the system of quality control to appropriate individuals within the relevant network firm or firms so that the necessary action can be taken,
(M) Complaints and Allegations
to provide it with reasonable assurance that it deals appropriately with:
(a) Complaints and allegations that the work performed by the firm fails to comply with professional standards and regulatory and legal requirements; and
(b) Allegations of non-compliance with the firm's system of quality control.
As part of this process, the firm shall establish clearly defined channels for firm personnel to raise any concerns in a manner that enables them to come forward without fear of reprisals.
-if during the investigations, deficiencies, noncompliance with firm system, firm may
(a) Taking appropriate remedial action in relation to an individual engagement or member of personnel;
(b) The communication of the findings to those responsible for training and professional development;
(c) Changes to the quality control policies and procedures; and
(d) Disciplinary action against those who fail to comply with the policies and procedures of the firm, especially those who do so repeatedly.
Documentation of the System of Quality Control
- doc to provide evidence of the operation of each element of its system of quality control.
-require retention of documentation for a period of time sufficient to permit those performing monitoring procedures to evaluate the firm's compliance with its system of quality control, or for a longer period if required by law or regulation