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GREAT ZIMBABWE UNIVERSITY
DEPARTMENT OF ACCOUNTING AND INFORMATION SYSTEM
COURSE CODE: MAAC501
APPLIED AUDITING & ASSURANCE SERVICES 1
NOTES
CHAPTER 4
Quality control
Subtopics
Principles and purpose
Quality control at a firm level
Quality control on an individual audit
Introduction
The role performed by auditors represents an activity of significant public interest. Quality independent audit is
crucial, both to users and to the audit profession as a whole. Poor audit quality damages the reputation of the
firm and may lead to loss of clients and thus fees, as well as an increased risk of litigation concomitant
professional insurance costs. Although there are specific standards giving guidance on how auditors should
perform their work with satisfactory quality, these can never cater for every situation. Two standards deal with
quality at a general level. These are ISQC 1
Quality control for firms that perform audits and reviews of
financial statements,
and other assurance and related services engagements,
and ISA 220
Quality control for
an audit of financial statements
Principles and purpose
Audit quality is not defined in law or through regulations, and neither do auditing standards provide a simple
definition. Although each stakeholder in the audit will give a different meaning to audit quality, at its heart it is
about delivering an
appropriate
professional
opinion
supported by the necessary
evidence
and
judgements
.
Many principles contribute to audit quality; including good leadership, experienced judgement, technical
competence, ethical values and appropriate client relationships, proper working practices and effective quality
control and monitoring review processes. The standards on audit quality provide guidance to firms on how to
achieve these principles.
Quality control at a firm level
The International Standard on Quality Control (ISQC 1) helps audit firms to establish quality standards for
their business.
The fact that auditors follow international auditing standards provides a general quality control framework
within which audits should be conducted. There are also specific quality control standards.
Purpose of ISQC 1
ISQC 1.11
The objective of the firm is to 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 applicable legal and regulatory
requirements; and
(b) Reports issued by the firm or engagement partners are appropriate in the circumstances.
We shall now consider the requirements of the rest of the standard, which fall into the following areas.
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Firm and leadership responsibilities for quality within the firm
Human resources
Engagement performance (see also below, the requirements of ISA 220)
Monitoring
Firm and leadership responsibilities for quality within the firm
ISQC 1.13
Personnel within the firm responsible for establishing and maintaining the firm's system of quality control shall
