The Quality Management webinar series, hosted by the IAASB in collaboration with IFAC, takes a deep dive into aspects of the IAASB’s International Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements. The webinar series focused on: Webinar One: All You Need to Know about the Firm’s Risk Assessment Process Webinar Two: Resources: Expectations for Firms and Engagement Partners Webinar Three: What’s New for Firms’ Monitoring and Remediation Processes (coming August 5, 2021 – register now) Webinar Four: Bringing it All Together: Exploring all the Components of a Quality Management System (coming August 18, 2021 – register now) ISQM 1 is part of the IAASB’s suite of quality management standards. Firms are required to have systems of quality management designed and implemented in accordance with ISQM 1 by December 15, 2022. Learn more about the quality management standards at: iaasb.org/quality-management

1. ISQM 1, Quality
Management for
Firms:
Resources:
Expectations for
Firms and
Engagement Partners
Webinar Series Part 2

2. The Quality Management Standards
Page 2
ISQM 1:
Quality
management
at the firm
level
ISA 220
(Revised):
Quality
management
at the
engagement
level
ISQM 2:
Engagement
quality
reviews

3. ISQM 1: The Structure and Components
Page 3
• Standard comprises:
o Eight components
o Other requirements addressing specific topics
• Components address:
o Processes
o Environment in which the system operates
o What is needed to operate the system
o Specific topics fundamental for engagement performance
• Components are not linear and siloed; they operate in an
iterative and integrated manner
o Respond to changes
o Continual flow of remediation and improvement

4. Resources in ISQM 1
Page 4
Human Resources
Technological Resources
Intellectual Resources
Financial Resources
Governance and leadership component:
• Resource needs, including financial resources, are
planned for and resources are obtained, allocated or
assigned in a manner that is consistent with the firm’s
commitment to quality
o Applies to all resources, including financial resources
Resources component:
• Human, technological and intellectual resources

5. Who is Considered a Human Resource?
Page 5
Personnel - partners and staff in
the firm
• Staff are professionals,
including experts the firm
employs
• Includes partners and staff in
other structures of the firm
(e.g., a service delivery center
in the firm)
Individuals external to the firm used in
the SOQM or performance of
engagements – i.e.:
• Individuals from within the firm’s
network
• Individuals employed by a service
provider
Individuals in the firm
Individuals external to the firm

6. Engagement Team
Page 6
Extant quality control standards:
All partners and staff performing the engagement, and
any individuals engaged by the firm or a network firm who
perform procedures on the engagement. Excludes:
• An auditor’s external expert engaged by the firm or by
a network firm.
• Individuals within the client’s internal audit function
who provide direct assistance.
New quality management standards:
All partners and staff performing the engagement, and
any other individuals who perform procedures on the
engagement, excluding an external expert and internal
auditors who provide direct assistance on an
engagement.
Who is excluded from engagement team?
• Individuals providing consultation
• Engagement quality reviewer
• Auditor’s external expert (i.e., not a partner or staff of the firm
or a network firm)
• Individuals within the client’s internal audit function who
provide direct assistance.
Who is included in engagement team?
• Partners and staff performing the engagement – includes
individuals from the firm’s service delivery centers
• Others performing procedures – includes component auditors,
others from the network, service providers
• Includes individuals with expertise in accounting or
auditing (i.e., they are not an auditor’s expert)
• Includes an auditor’s internal expert (i.e., is a partner or
staff of the firm or a network firm)

7. ISA 220 (Revised): Key Features as it Relates to Engagement Teams
Page 7
• Responsibilities of the engagement partner for the engagement team:
o Making engagement team aware of relevant ethical requirements, their responsibilities when breaches
arise
o Remaining alert for breaches of relevant ethical requirements by the engagement team
o Members of engagement team have appropriate competence and capabilities
o Direction, supervision of members of engagement team, and review of their work
o Engagement team undertaking consultation
o Informing engagement team of responsibility to cooperate with engagement quality reviewer
• Responsibilities of engagement team
o Information that would have caused the firm to decline the engagement
o Differences of opinion and following firm’s policies or procedures for resolving them

8. ISQM 1: How it Addresses Internal and External Human Resources
Page 8
 Requirements for engagement teams:
 Engagement team responsibilities
 Direction, supervision and review
 Exercising professional judgment and skepticism
 Differences of opinion
 Assigning engagement team members
 Exchanging information
 Communicating matters related to monitoring and
remediation
 Requirements for individuals performing activities within the
SOQM
 Assigning individuals to perform activities within the SOQM
 Individuals performing monitoring activities
 Communicating matters related to monitoring and
remediation
 Ultimate responsibility and accountability for the SOQM: Assigned to
CEO/managing partner/managing board of partners
 The firm’s culture: Responsibility of personnel for quality in
performing engagements or activities within the SOQM, and their
expected behavior
 Relevant ethical requirements
 Hiring, developing and retaining personnel
 Responsibility of personnel to exchange information
 Confirming compliance with independence requirements
 Relevant ethical requirements (only to extent that they apply)
 Obtaining individuals from external sources
 Service providers and networks, when it relates to a human resource
ISQM 1: Requirements that address only individuals
external to the firm
ISQM 1: Requirements that address only personnel
ISQM 1: Requirements that address all
individuals?

9. The Interrelationship Between ISQM 1 and ISA 220 (Revised): An Illustration
Page 9
ISQM 1: The firm responsibilities
Engagement team members are assigned to each
engagement
Illustrative responses at firm level:
• IT application to track people and assignments
• Administrator to manage staff allocations
• Policies or procedures for how to request staff
for engagements
o May include specific policies or procedures for
busy periods
• Periodic leadership meetings to discuss staff
utilization and assignments
• Policies or procedures for addressing issues
ISA 220 (Revised): The engagement partner
responsibilities
Determine that sufficient and appropriate resources to perform the
engagement are assigned / made available and take appropriate action
if the resources are insufficient/inappropriate
Illustrative actions at engagement level:
• Follow the firm’s policies or procedures for how to request staff
• Check that staff are assigned and consider if sufficient and
appropriate – may involve some further liaison with administrator to
refine assignments
• If not sufficient/appropriate, take appropriate action, including
communicate the need for additional or alternative resources

10. Technological and Intellectual Resources
Page 10
Technological
Resources
Intellectual
Resources
• Designing, implementing or
operating SOQM
• Used by engagement teams to
perform engagements
• Enable effective operation of IT
applications
E.g., methodology, guides,
checklists, access to information
sources
What is the objective?
• Appropriate
• Obtained or developed
• Implemented
• Maintained
• Used
• Intellectual resources – consistent
with professional standards and
applicable legal and regulatory
requirements

11. Service Providers
Page 11
• What is a service provider?
o Individual or organization external to the firm
o Provides a resource used in firm’s system or engagements
o Excludes anything from within the firm’s network
o NB! Includes component auditors from other firms (outside firm’s network)
Identify the need for external resources
• Individuals are obtained from external
sources
• Appropriate technological resources are
obtained or developed
• Appropriate intellectual resources are
obtained or developed
Resource is appropriate for use
• Other quality objectives relevant to that
resource still apply

12. Questions

13. • Publications and published videos
– First time implementation guides
• Focus on key areas and more complex aspects of the standards
• Highlights key changes from extant standards
– Fact sheets
– Video: Initial implementation efforts
• Webinars
– Webinar 1: All you need to know about the firm’s risk assessment process
(available on YouTube)
– Upcoming webinars
Implementation Support
Page 13
Topic Date Time
The monitoring and
remediation process
5 August 2021 11am – 12pm GMT
Other aspects of ISQM 1 18 August 2021 11am – 12pm GMT

14. How to Follow Us
Register on our webpage and subscribe to our eNews
www.iaasb.org
Go to our Quality Management webpage:
www.iaasb.org/quality-management
Follow us on social media
@IAASB_News
@International Auditing and Assurance Standards Board
@International Auditing & Assurance Standards Board
Page 14

15. www.iaasb.org
For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.
IAPN
.
ISA. ISAE
.
ISQC
.
ISRE
.
ISRS
.
International Auditing
and Assurance
Standards Board®