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Technical Resource
This webpage contains pronouncements, guides and articles that are relevant to the new and revised Quality Management Standards.
Effective Date
The standards are effective from 15 December 2022. They replace the extant HKSQC 1 and HKSA 220.
Affected standards
The new and revised Quality Management Standards consist of:
HKSQM 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements
- HKSQM 1 deals with the firm’s responsibility for quality through having a system of quality management. It replaces HKSQC 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements and Other Assurance and Related Services Engagements.
- Under HKSQM 1, firms are required to design a system of quality management to manage the quality of engagements performed by the firm. This shift in focus from quality control to quality management is achieved by incorporating a risk-based approach, i.e., managing risks to quality.
- HKSQM 1 applies to all firms performing audits or reviews of financial statements, or other assurance or related services engagements, including compilations or agreed-upon procedures engagements.
HKSQM 2 Engagement Quality Review
- HKSQM 2 deals with the eligibility of the engagement quality reviewer (EQR), and the performance and documentation of the EQR. Although HKSQM 2 is a new standard, many of its elements were enhanced and relocated from extant HKSQC 1 and HKSA 220.
HKSA 220 (Revised) Quality Management for an Audit of Financial Statements
- HKSA 220 (Revised) applies to audits of financial statements and addresses how quality is managed at the audit engagement level by the engagement partner. It makes clear that the engagement partner is responsible for managing and achieving quality at the engagement level, for determining that there are sufficient and appropriate resources assigned or made available on a timely basis and for determining the nature, timing and extent of direction, supervision and review. It also contains a “stand-back” provision that requires the engagement partner to determine they have done enough to take overall responsibility for managing and achieving quality on the audit and whether their involvement has been sufficient and appropriate.
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