In June 2022, the AICPA Auditing Standards Board (ASB) issued three interrelated standards on quality management (collectively, the QM standards). The new QM standards represent a significant change in how CPA firms will approach audit and attestation quality in the future, moving from a policies-based approach to a risk-based approach. The new standards will affect every firm that performs engagements in accordance with the SASs, SSARSs and SSAEs. Implementation of these new standards is required by Dec. 15, 2025.

The key changes brought about by the new standards are:

• A new risk-based approach, incorporating a risk assessment process, driving firms to focus on quality management tailored to their circumstances 
• Revised components of the system of quality management — two new components, including information and communication 
• More robust leadership and governance requirements 
• Enhanced monitoring and remediation processes 
• New requirements for networks and service providers

The new standards require firms to determine their quality management risks, determine the root cause of the identified risks, and develop responses to eliminate the identified risks and avoid engagement non-performance.

• Overview of the new standards, including discussion of relevant changes to existing quality control requirements.
• Implementation guidance for a risk-based approach to quality management that is customized to small and medium firms, including sole proprietors.
• Analysis and determination of root causes for quality risk determination.
• Examples of responses to identified quality risks.
• Guidance on approaches to monitoring and remediation.

 

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