practitioner interacts with the system of quality management frequently and information may be more readily available. Tip: A new requirement in SQMS No. 1 is for a firm leader to evaluate, at least annually, whether the system of quality management provides reasonable assurance that the objectives of the system of quality management are being met. The effective date for this evaluation is within one year of Dec. 15, 2025. Firm leadership is required to make this evaluation even in a peer review year. It is comparable to management’s assertion about its system of internal control over financial reporting (ICFR), which remains management’s responsibility regardless of whether an audit of an entity’s system of ICFR is performed. RESOURCES TO HELP YOU If your firm hasn’t started the transition from a system of quality control to a system of quality management, you’re late to the game, but you still can finish on time. Implementation of the new QM standards is required by Dec. 15, 2025, which is around the corner. (See the “How to Keep Implementation of the Quality Management Standards on Track” section.) Resources and information to support quality management implementation are available at aicpa-cima.com/auditqm. Among other content, you’ll find: A free interactive practice aid with an accompanying Example Risk Assessment template tool to help you implement SQMS No. 1 (AICPA membership is needed to unlock this content). A document mapping the current system of quality control (SQCS No. 8) to the new system of quality management (SQMS No. 1). Quality management standards and related guidance. A to-do checklist for firms. HOW TO KEEP IMPLEMENTATION OF THE QUALITY MANAGEMENT STANDARDS ON TRACK Every firm that performs engagements in accordance with the Statements on Auditing Standards (SASs), Statements on Standards for Accounting and Review Services (SSARSs), and Statements on Standards for Attestation Engagements (SSAEs) should have some understanding of the new quality management standards. To keep implementation on track: Prioritize your firm’s efforts. Schedule time to read the standards. Add a recurring meeting to your calendar and invite others in your firm to participate. Consider attending webinars or perusing industry publications to learn from other firms and hear different perspectives on how firms are implementing the new requirements. Engage in conversations internally and externally. OVERVIEW OF THE NEW STANDARDS The new standards will apply to all firms that conduct any audits, attest examinations, financial statement or attest reviews, compilations, or agreed-upon-procedures engagements. Here’s a rundown of the new standards with a brief description of each: Statement on Quality Management Standards (SQMS) No. 1, A Firm’s System of Quality Management, introduces a new risk-based assessment process and requires firms to design, implement, and operate a system of quality management customized to their practice and engagements. This includes establishing quality objectives, assessing the specific risks to quality, and designing and implementing responses to address those risks. In addition, firm leadership is required to evaluate annually whether the firm’s system of quality management is meeting its objectives. This approach calls for continuous improvement and ongoing remediation over time. SQMS No. 1 supersedes Statement on Quality Control Standards No. 8, A Firm’s System of Quality Control. To access the statement, scan the QR code. SQMS No. 2, Engagement Quality Reviews, applies when a firm decides that an engagement quality (EQ) review is an applicable response to address its engagement performance quality management objective. This new standard addresses the appointment and eligibility of the EQ reviewer (whether inside or outside of the firm) and performance of the EQ reviews. To access the statement, scan the QR code. SQMS No. 3, Amendments to QM Sections 10, A Firm’s System of Quality Management, and 20, Engagement Quality Reviews: » Amends QM sections 10 and 20 to conform certain terms to language used in SAS No. 149, Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors and Audits of Referred-to Auditors). https://www.aicpa-cima.com/ resources/download/aicpa-statementon-quality-management-standards-no-1 https://www.aicpa-cima.com/ resources/download/aicpa-statementon-quality-management-standards-no-2 CONTINUED FROM PAGE 19 20 Nebraska CPA
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