QUALITY CONTROL STANDARDS CPA ALFRED LAGAT. 1.You are in a cabin and it is pitch black. You have one...

QUALITY CONTROL QUALITY CONTROL STANDARDSSTANDARDS

CPA ALFRED CPA ALFRED LAGATLAGAT

1. You are in a cabin and it is pitch black. You have one match on you. Which do you light first, the newspaper, the lamp, the candle or the fire?

2. There is a room with no doors, no windows nothing and a man is hung from the ceiling and a puddle of water is on the floor. How did he die?

3. A lift is on the ground floor. There are 4 people in the lift including me. When the lift reaches 1st floor, 1 person gets out 3 people get in. The lift goes up to the 2nd floor 2 people get out 6 people get in. It then goes up to the next floor up, no one gets out but 12 people get in. Halfway up to the next floor up the lift cables snaps, it crashes to the floor. Everyone dies in the lift. How did I survive?

Quality Control Quality Control StandardsStandards

Significant objective of IAASB is the quality control.

Quality control is fundamental to high quality audit work.

• ISQC 1- Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.

•ISQC1 establishes a firm’s responsibilities to set up and maintain a system of quality control for all audits, other assurance and related services agreements.

• The revised International Standard on Auditing (ISA 220) Quality Control for Audits of Historical Information, which establishes standards for the specific responsibilities of firm personnel for an individual audit engagement and is premised upon the requirements of the firm-wide quality control standards set out in ISQC 1.


The quality control standards are designed:

to help restore public confidence in auditing following the corporate financial scandals of prior years and

to ensure the highest level of quality in the delivery of other assurance services by professional accountants.

Why focus on Quality Control Standards?


International Standard on International Standard on Quality Control (ISQC) 1Quality Control (ISQC) 1

The purpose of this International Standard is to establish standards and provide guidance regarding a firm’s responsibilities for its system of quality control for audits and reviews of historical financial information, and for other assurance and related services engagements.

ISQC 1- Basic Points

• The firm should establish a system of quality control designed to provide it with reasonable assurance that the firm and its personnel comply with professional standards and regulatory and legal requirements, and that reports issued by the firm or engagement partners are appropriate in the circumstances.

What is ISQC1What is ISQC1

ISQC1 is an international standard on quality controlISQC1 is an international standard on quality control It came into effect on 30 June 2005 with subsequent It came into effect on 30 June 2005 with subsequent

revisionsrevisions ISQC1 establishes standards for quality at firm levelISQC1 establishes standards for quality at firm level

Institute of Institute of Certified Public Accountants Certified Public Accountants

of Kenya of Kenya

At the firm level:At the firm level:–International Standards on Quality International Standards on Quality

Control 1 (ISQC 1) – Quality Control for Control 1 (ISQC 1) – Quality Control for Firms That Perform Audits of Historical Firms That Perform Audits of Historical Financial information, and Other Assurance Financial information, and Other Assurance and Related Services Engagements. and Related Services Engagements.

–Firms needed to have their systems Firms needed to have their systems established by 15 December 09established by 15 December 09


of Kenyaof Kenya

At the Institute level:At the Institute level:

Statement of Membership Obligations – Statement of Membership Obligations – Issued April 2004-Revised 2006Issued April 2004-Revised 2006

Effective 15 December 2009Effective 15 December 2009


of Kenyaof Kenya

Statements of Membership Obligations Statements of Membership Obligations (SMOs or Statements) provide clear (SMOs or Statements) provide clear benchmarks to current and potential benchmarks to current and potential IFAC members to assist them in IFAC members to assist them in ensuring high quality performance by ensuring high quality performance by professional accountants.professional accountants.


of Kenyaof Kenya

SMO 1 – Quality AssuranceSMO 1 – Quality Assurance SMO 2 - International Education SMO 2 - International Education

Standards for Professional AccountantsStandards for Professional Accountants SMO 3 – International Standards SMO 3 – International Standards

related to Practice Statements and related to Practice Statements and other papers issued by IAASBother papers issued by IAASB

SMO 4 – IFAC Code of EthicsSMO 4 – IFAC Code of Ethics


of Kenyaof Kenya

SMO 5 – International Public Sector SMO 5 – International Public Sector Accounting Standards (IPSAS) and Accounting Standards (IPSAS) and other IPSASB guidanceother IPSASB guidance

SMO 6 – Investigation and DisciplineSMO 6 – Investigation and Discipline SMO 7 – International Financial SMO 7 – International Financial

Reporting Standards (IFRS)Reporting Standards (IFRS)


of Kenyaof Kenya

Objectives of ISQC1 Objectives of ISQC1

Establish Establish basic principlesbasic principles and and essential essential proceduresprocedures, and to provide guidance , and to provide guidance regarding a firm’s responsibilities for its regarding a firm’s responsibilities for its system of quality controlsystem of quality control for for

Audits & reviews of historical financial Audits & reviews of historical financial informationinformation

Other assurance & related services Other assurance & related services engagementsengagements


of Kenyaof Kenya

Objectives of a firm’s system of quality control Objectives of a firm’s system of quality control are are The firm should establish a system of quality control The firm should establish a system of quality control designed:designed:

to provide it with reasonable assurance that the firm to provide it with reasonable assurance that the firm and its personnel comply with professional standards and its personnel comply with professional standards and regulatory and legal requirements, and and regulatory and legal requirements, and

that reports issued by the firm or engagement partners that reports issued by the firm or engagement partners are appropriate in the circumstances. A system of are appropriate in the circumstances. A system of quality control comprises of policies designed to achieve quality control comprises of policies designed to achieve these objectives and the procedures necessary to these objectives and the procedures necessary to implement and monitor compliance with those policies.implement and monitor compliance with those policies.


of Kenyaof Kenya

Objectives of a firm’s system of quality Objectives of a firm’s system of quality control contd-control contd-

The The policies policies designed to achieve the objectives designed to achieve the objectives set out above; and,set out above; and,

The The proceduresprocedures necessary to implement and necessary to implement and monitor compliance with those policies.monitor compliance with those policies.

The Quality Control requirements apply to all firms.The Quality Control requirements apply to all firms.


of Kenyaof Kenya

Elements of a System of Quality ControlElements of a System of Quality Control

1.1. Leadership responsibilities for quality within the firmLeadership responsibilities for quality within the firm

2.2. Ethical requirementsEthical requirements

3.3. Acceptance and continuance of clients relationships and specific Acceptance and continuance of clients relationships and specific

engagementsengagements

4.4. Human resourcesHuman resources

5.5. Engagement performanceEngagement performance

6.6. MonitoringMonitoring


of Kenyaof Kenya

The quality control procedures should be The quality control procedures should be documented and communicated to the firm’s documented and communicated to the firm’s personnel. Communication entails:personnel. Communication entails: Description of quality control Policies & ProceduresDescription of quality control Policies & Procedures Objectives that the Policies & Procedures are designed Objectives that the Policies & Procedures are designed

to achieveto achieve

Specification of individual responsibility for Specification of individual responsibility for quality and compliance with the Procedures & quality and compliance with the Procedures &

Procedures Procedures


of Kenyaof Kenya

1.1. Leadership responsibilities for Quality within the Leadership responsibilities for Quality within the firm.firm.

Requires the firm’s chief executive officer Requires the firm’s chief executive officer (or equivalent) or firm’s managing board of (or equivalent) or firm’s managing board of

partners (or equivalent) to assume ultimate partners (or equivalent) to assume ultimate responsibility for the firm’s system of quality responsibility for the firm’s system of quality controlcontrol

Firm’s culture should recognise & reward high quality Firm’s culture should recognise & reward high quality work – concretised in Policies & Procedures addressing work – concretised in Policies & Procedures addressing performance evaluation, compensation & promotionperformance evaluation, compensation & promotion


of Kenyaof Kenya

Leadership responsibilities for Quality within the Leadership responsibilities for Quality within the firm contd-.firm contd-.

Commercial considerations should not override Commercial considerations should not override the quality of work performed-eg time spentthe quality of work performed-eg time spent

Firm should devote sufficient resources for the Firm should devote sufficient resources for the development, documentation & support of the development, documentation & support of the quality control Policies & Proceduresquality control Policies & Procedures


of Kenya of Kenya

Leadership responsibilities for Quality within the Leadership responsibilities for Quality within the firm contd-firm contd-

Operational responsibility for the quality control system Operational responsibility for the quality control system should be assigned to someone with should be assigned to someone with sufficient &sufficient & appropriateappropriate:: experienceexperience and and abilityability to identify, understand & to identify, understand &

develop Policies & Procedures;develop Policies & Procedures;

authorityauthority to implement the Policies & Procedures to implement the Policies & Procedures


of Kenya of Kenya

2. Ethical Requirements2. Ethical Requirements

An Ethical practice is the foundation of long term An Ethical practice is the foundation of long term success. success.

The firm and its personnel should comply with relevant The firm and its personnel should comply with relevant ethical requirements.ethical requirements.

The IFAC Code of Ethics establishes the fundamental The IFAC Code of Ethics establishes the fundamental principles of professional ethics.principles of professional ethics.

2. Ethical Requirements contd-2. Ethical Requirements contd-For professional accountants the fundamental For professional accountants the fundamental Ethical Principles (as per IFAC requirements) are:Ethical Principles (as per IFAC requirements) are:

IndependenceIndependence IntegrityIntegrity ObjectivityObjectivity Professional competence and due careProfessional competence and due care Confidentiality; andConfidentiality; and Professional behaviourProfessional behaviour


of Kenya of Kenya

Ethical requirements - IndependenceEthical requirements - Independence The firm should establish policies and procedures The firm should establish policies and procedures

designed to maintain independence per IFAC code designed to maintain independence per IFAC code and national ethical requirements, which enable it to:and national ethical requirements, which enable it to:

Communicate its independence requirements to Communicate its independence requirements to its personnel and other appropriate associatesits personnel and other appropriate associates

Identify and evaluate circumstances and Identify and evaluate circumstances and relationships that create threats to relationships that create threats to independence, and take independence, and take appropriate appropriate actionaction


of Kenya of Kenya

Ethical requirements - IndependenceEthical requirements - Independence

Policies and procedures onPolicies and procedures on Independence Independence should require:should require:

Engagement partners to provide relevant Engagement partners to provide relevant information on client engagements and scope of information on client engagements and scope of services to the firmservices to the firm Prepare a list of entities to which Prepare a list of entities to which

independence policies & procedures applyindependence policies & procedures apply Maintain the list up to dateMaintain the list up to date


of Kenya of Kenya

Policies and procedures on Independence Policies and procedures on Independence should require:should require:

Accumulation and communication of relevant Accumulation and communication of relevant information to appropriate personnelinformation to appropriate personnel

Make the list available to staffMake the list available to staff Notify staff of any changesNotify staff of any changes

Personnel to promptly notify the firm of any Personnel to promptly notify the firm of any threat to independencethreat to independence


of Kenyaof Kenya

Ethical requirements – Independence Ethical requirements – Independence ConfirmationsConfirmations

At least annually, the firm should obtain At least annually, the firm should obtain written written confirmationconfirmation of compliance with its policies and of compliance with its policies and procedures on independence from procedures on independence from all firm all firm personnelpersonnel required to be independent required to be independent


of Kenya of Kenya

Ethical requirements – Independence Ethical requirements – Independence ConfirmationsConfirmations

Staff should be required to confirm that:Staff should be required to confirm that:

They are familiar with the policies & proceduresThey are familiar with the policies & procedures Prohibited investments have not been held at any time Prohibited investments have not been held at any time

during the relevant periodduring the relevant period Prohibited relationships do not existProhibited relationships do not exist Other prohibited transactions have not occurredOther prohibited transactions have not occurred


of Kenya of Kenya

Ethical requirements – staff rotationEthical requirements – staff rotation

Set out criteria to ensure that independence is not Set out criteria to ensure that independence is not compromised by using same senior personnel on compromised by using same senior personnel on assurance engagements over a long period of time.assurance engagements over a long period of time.

For audits of listed entities, complying with For audits of listed entities, complying with requirements on partner rotation per IFAC Code or requirements on partner rotation per IFAC Code or (a more restrictive) National Code.(a more restrictive) National Code.


of Kenya of Kenya

Ethical requirements – Conflict of interestEthical requirements – Conflict of interest

Conflicts of interest can arise in a number of ways:Conflicts of interest can arise in a number of ways:

e.g when a partner or staff member represents two e.g when a partner or staff member represents two clients (a buyer and a seller) to the same clients (a buyer and a seller) to the same transaction or is assisting a client in hiring a senior transaction or is assisting a client in hiring a senior person in the organization when the partner or staff person in the organization when the partner or staff is aware that their relative is a candidate for the is aware that their relative is a candidate for the position, or where a firm provides audit and position, or where a firm provides audit and accountancy services etcaccountancy services etc


of Kenya of Kenya

Ethical requirements – Conflict of interestEthical requirements – Conflict of interest Partners and staff should be free of any interests, Partners and staff should be free of any interests,

influences or relationships in respect of the client’s influences or relationships in respect of the client’s affairs which may impair professional judgment or affairs which may impair professional judgment or objectivity. objectivity.

The firm is responsible for development, The firm is responsible for development, implementation, compliance, enforcement and implementation, compliance, enforcement and monitoring of practice methods and procedures to monitoring of practice methods and procedures to assist partners and staff deal with any conflict of assist partners and staff deal with any conflict of interest situations. interest situations.


of Kenya of Kenya

Ethical Requirements – ConfidentialityEthical Requirements – Confidentiality

All partners and staff must protect and keep All partners and staff must protect and keep confidential any client information that is meant to be confidential any client information that is meant to be kept confidential and protected according to kept confidential and protected according to governing laws, regulatory authorities, IFAC code, governing laws, regulatory authorities, IFAC code, firm policy and specific client instructions and firm policy and specific client instructions and agreements.agreements.

Client and personal information should only be Client and personal information should only be disclosed for the purpose that it was obtained for.disclosed for the purpose that it was obtained for.

A firm must have a policy on the confidentiality A firm must have a policy on the confidentiality requirement for its partners and staff.requirement for its partners and staff.


of Kenya of Kenya

3.3. Acceptance and continuance of client Acceptance and continuance of client relationships and specific engagementsrelationships and specific engagements

Policies and procedures to ensure that the firm Policies and procedures to ensure that the firm will only undertake or continue relationships and will only undertake or continue relationships and engagements where it:engagements where it:

Has considered the integrity of the clientHas considered the integrity of the client Is competent to perform the engagement and Is competent to perform the engagement and

has the capabilities, time and resources-rule of has the capabilities, time and resources-rule of life... Don’t promise what you cant deliverlife... Don’t promise what you cant deliver

Can comply with ethical requirementsCan comply with ethical requirements


of Kenya of Kenya

Acceptance and continuance of client Acceptance and continuance of client relationships and specific engagements contdrelationships and specific engagements contd

Matters to consider on Client’s integrity:Matters to consider on Client’s integrity: Identity and business reputation of the client’s Identity and business reputation of the client’s

principal owners, key management, related parties principal owners, key management, related parties and those charged with its governanceand those charged with its governance

Nature of the client’s operations including its Nature of the client’s operations including its business practicesbusiness practices

Aggressive concern to maintain low audit feesAggressive concern to maintain low audit fees

Institute of Institute of Certified Public Certified Public

Accountants Accountants of Kenya of Kenya

Acceptance and continuance of client Acceptance and continuance of client relationships:relationships:

Client’s integrity – cont’d:Client’s integrity – cont’d: Information on the attitude of principal owners Information on the attitude of principal owners

and key management towards aggressive and key management towards aggressive interpretation of accounting standards and the interpretation of accounting standards and the control environmentcontrol environment

Indications of an inappropriate limitation in the Indications of an inappropriate limitation in the scope of workscope of work


of Kenya of Kenya


Client’s integrity – cont’dClient’s integrity – cont’d

Indications of involvement in money laundering Indications of involvement in money laundering or other criminal activitiesor other criminal activities

Reasons for non-reappointment of previous firmReasons for non-reappointment of previous firm


of Kenya of Kenya


Sources of information include:-Sources of information include:- Communication with existing or previous Communication with existing or previous

providers of professional servicesproviders of professional services Discussions with third parties such as bankers, Discussions with third parties such as bankers,

legal counsel and industry peerslegal counsel and industry peers Background searches of relevant databasesBackground searches of relevant databases


of Kenya of Kenya


Assess the Firm’s capabilities, competence, Assess the Firm’s capabilities, competence, resources - Consider whether Firm’sresources - Consider whether Firm’s

Personnel have knowledge of relevant industriesPersonnel have knowledge of relevant industries Personnel have experience with relevant regulatory or Personnel have experience with relevant regulatory or

reporting requirements or can acquire the skills & reporting requirements or can acquire the skills & knowledge effectivelyknowledge effectively

Has sufficient personnel with the necessary capabilities Has sufficient personnel with the necessary capabilities and competenceand competence


of Kenya of Kenya


Assess the Firm’s capabilities, competence, Assess the Firm’s capabilities, competence, resources - Consider whether Firm’sresources - Consider whether Firm’s

Whether experts are available if neededWhether experts are available if needed Availability of an engagement quality control reviewer Availability of an engagement quality control reviewer

– who meets specified criteria & eligibility – who meets specified criteria & eligibility requirementsrequirements

Ability to complete assignment within the reporting Ability to complete assignment within the reporting deadlinedeadline


of Kenya of Kenya

Acceptance and continuance of client Acceptance and continuance of client relationships and specific assignments:relationships and specific assignments:

If accepting an engagement may give rise to actual If accepting an engagement may give rise to actual or perceived conflict of interest, the Firm should or perceived conflict of interest, the Firm should consider whether it is appropriate to accept the consider whether it is appropriate to accept the engagementengagement


of Kenya of Kenya

4.4. Human resourcesHuman resources

The Firm should ensure it has The Firm should ensure it has sufficient personnelsufficient personnel with the requisite with the requisite capabilitiescapabilities, , competencecompetence, and , and commitment to ethical principlescommitment to ethical principles to enable it to to enable it to perform its engagements in accordance with perform its engagements in accordance with professional standards and regulatory / legal professional standards and regulatory / legal requirementsrequirements


of Kenya of Kenya

Human Resources contd-Human Resources contd-

HR policies and procedures should address HR policies and procedures should address the the following issues:following issues:

RecruitmentRecruitment Performance evaluation and promotionPerformance evaluation and promotion Capabilities and competenceCapabilities and competence Career development including promotionCareer development including promotion CompensationCompensation Estimation of personnel needsEstimation of personnel needs


of Kenya of Kenya

Human Resources - RecruitmentHuman Resources - Recruitment

The Firm should:The Firm should: Plan its personnel needs at all levelsPlan its personnel needs at all levels Establish quantified hiring objectives based on Establish quantified hiring objectives based on

current clientele, anticipated growth & retirement current clientele, anticipated growth & retirement etcetc

Establish attributes for potential hiresEstablish attributes for potential hires


of Kenya of Kenya

Human resources – Human resources – Recruitment Recruitment ……

Attributes for potential hires may include:Attributes for potential hires may include: Intelligence, integrity, honesty, etcIntelligence, integrity, honesty, etc Academic backgroundAcademic background Experience, etcExperience, etc

The Firm should set guidelines on:The Firm should set guidelines on: Hiring of relativesHiring of relatives Rehiring of former employeesRehiring of former employees Hiring of Client personnel, etc Hiring of Client personnel, etc


of Kenya of Kenya

Human resources – Human resources – Monitoring of Monitoring of RecruitmentRecruitment

The Firm shouldThe Firm should Monitor Monitor the effectiveness of the effectiveness of the recruitment programmes for:the recruitment programmes for:

Adherence with policies & proceduresAdherence with policies & procedures Results of hiring programmes to confirm Results of hiring programmes to confirm

whether the Firm’s goals and needs are being whether the Firm’s goals and needs are being achievedachieved


of Kenya of Kenya

Human Resource contd-Human Resource contd-

Capabilities and competence are developed Capabilities and competence are developed through:through:

Professional educationProfessional education Continuing professional development, including Continuing professional development, including

trainingtraining Work experienceWork experience Coaching by more experienced staff, for example, Coaching by more experienced staff, for example,

other members of the engagement teamother members of the engagement team


of Kenya of Kenya

Human Resource cont-Human Resource cont-

Professional DevelopmentProfessional Development

The Firm should:The Firm should: Issue guidelines and requirements for CPEIssue guidelines and requirements for CPE Develop appropriate in-house programsDevelop appropriate in-house programs Provide an appropriate orientation program for new Provide an appropriate orientation program for new

employeesemployees Monitor effectiveness of CPE programsMonitor effectiveness of CPE programs Encourage membership of professional bodies / Encourage membership of professional bodies /

societies – including staff serving in relevant societies – including staff serving in relevant committeescommittees


of Kenya of Kenya

Human Resource - Advancement Human Resource - Advancement

The Firm shouldThe Firm should Establish qualifications deemed necessary for Establish qualifications deemed necessary for

various responsibility levels in the Firmvarious responsibility levels in the Firm Establish criteria for performance evaluation e.g.Establish criteria for performance evaluation e.g.

Technical knowledge, analytical skills, Technical knowledge, analytical skills, leadership skills, client relations, etc.leadership skills, client relations, etc.

Evaluate performance and provide feedbackEvaluate performance and provide feedback


of Kenya of Kenya

5.5. Engagement PerformanceEngagement Performance

The firm should establish policies and The firm should establish policies and procedures procedures designed to ensure thatdesigned to ensure that

Engagements are performed in accordance with Engagements are performed in accordance with professional standards and regulatory and legal professional standards and regulatory and legal requirementsrequirements

Appropriate audit reports are issuedAppropriate audit reports are issued Audit work should be assigned to personnel who Audit work should be assigned to personnel who

have the have the degreedegree of of technical trainingtechnical training and and proficiencyproficiency required in the circumstances required in the circumstances


of Kenya of Kenya

Engagement Performance contd-Engagement Performance contd-

This is accomplished through:This is accomplished through: Written or electronic manualsWritten or electronic manuals Software toolsSoftware tools Other forms of standardised documentationOther forms of standardised documentation Industry specificIndustry specific


of Kenya of Kenya


Matters that should be addressed include:Matters that should be addressed include:

How the engagement teams are briefed to obtain How the engagement teams are briefed to obtain

understanding of the objectives of their workunderstanding of the objectives of their work


of Kenya of Kenya


Matters that should be addressed include:-Matters that should be addressed include:- Processes for complying with applicable Processes for complying with applicable

engagement standardsengagement standards Processes of engagement supervision, staff Processes of engagement supervision, staff

training and coachingtraining and coaching Methods of reviewing the work performed, the Methods of reviewing the work performed, the

significant judgements made and the form of significant judgements made and the form of report being issuedreport being issued


of Kenya of Kenya


Matters that should be addressed include:Matters that should be addressed include:

Appropriate documentation of the work Appropriate documentation of the work performed, and of the timing and extent of the performed, and of the timing and extent of the reviewreview

Processes to keep all policies and procedures Processes to keep all policies and procedures currentcurrent



Engagement PerformanceEngagement Performance

Team selectionTeam selection, etc - the firm should, etc - the firm should Identify on a timely basis the staffing requirements of Identify on a timely basis the staffing requirements of

specific assignmentsspecific assignments Prepare budgets to determine manpower requirements & Prepare budgets to determine manpower requirements &

schedule audit workschedule audit work In allocating staff, consider continuity, development In allocating staff, consider continuity, development

needs, rotation, etcneeds, rotation, etc Appoint someone to be responsible for assigning Appoint someone to be responsible for assigning

personnel to auditspersonnel to audits


of Kenya of Kenya


Planning, Supervision & Review – the firm Planning, Supervision & Review – the firm

should:should:

Specify procedures, form and minimum contents of Specify procedures, form and minimum contents of audit plansaudit plans

Develop sources of background information on Develop sources of background information on client – prior period & permanent audit files, etcclient – prior period & permanent audit files, etc

Develop guidance for the form and content of Develop guidance for the form and content of working papersworking papers


of Kenya of Kenya


Planning, Supervision & Review – the firm should:Planning, Supervision & Review – the firm should: Ensure appropriate supervision and monitoring at all Ensure appropriate supervision and monitoring at all

levels and stages of the assignmentlevels and stages of the assignment Introduce standardised forms, checklists, Introduce standardised forms, checklists,

questionnaires, etcquestionnaires, etc Provide on-the-job training - including involving Provide on-the-job training - including involving

assistants in many areas/sections of the workassistants in many areas/sections of the work




Supervision includes:Supervision includes: Tracking progress of engagement & considering:Tracking progress of engagement & considering:

capabilities and competencies of the capabilities and competencies of the engagement teamengagement team

Whether sufficient time is allocated to projectWhether sufficient time is allocated to project Whether staff understand instructions and Whether staff understand instructions and

are complying with themare complying with them




Supervision includes:-Supervision includes:-

Addressing significant issues arising during the Addressing significant issues arising during the engagementengagement

Identifying matters for consultation or Identifying matters for consultation or consideration by more experienced team consideration by more experienced team membersmembers


of Kenya of Kenya

Engagement Performance - ConsultationEngagement Performance - Consultation Appropriate consultation should take place on difficult Appropriate consultation should take place on difficult

or contentious mattersor contentious matters The nature / scope and conclusions of such The nature / scope and conclusions of such

consultations should be documentedconsultations should be documented

ProceduresProcedures Identify areas and specialised situations where Identify areas and specialised situations where

consultation is required – due to say, the nature & consultation is required – due to say, the nature & complexity, emerging issues, etccomplexity, emerging issues, etc




Consultation – ProceduresConsultation – Procedures Maintain & provide access to reference libraries, Maintain & provide access to reference libraries,

technical manuals, etctechnical manuals, etc Designate specialists for particular industries, Designate specialists for particular industries,

technical issues, etctechnical issues, etc

Differences on OpinionDifferences on Opinion

Firm should establish mechanisms to resolve Firm should establish mechanisms to resolve differences of opinion and, when required, involving differences of opinion and, when required, involving the Partner & Quality Control Reviewerthe Partner & Quality Control Reviewer




Criteria for deciding engagements for QCRCriteria for deciding engagements for QCR

Quality control reviews should be completed Quality control reviews should be completed before the audit report is issuedbefore the audit report is issued in respect of: in respect of:

All audits of financial statements of listed All audits of financial statements of listed entitiesentities

All engagements meeting the All engagements meeting the criteriacriteria established by the Firmestablished by the Firm




Criteria for deciding engagements for QCR Criteria for deciding engagements for QCR include:include:

Nature of engagement, including extent to which Nature of engagement, including extent to which it involves a matter of public interestit involves a matter of public interest

Identification of unusual circumstances or risksIdentification of unusual circumstances or risks Requirement of laws or regulationsRequirement of laws or regulations



66.. MonitoringMonitoring

Involves an Involves an ongoing considerationongoing consideration and evaluation and evaluation of the firm’s system of quality control of the firm’s system of quality control including including periodic inspection of a selection of completed periodic inspection of a selection of completed engagementsengagements, to provide reasonable assurance , to provide reasonable assurance that the system of Quality Control remains that the system of Quality Control remains relevantrelevant, , adequateadequate and and effectiveeffective



Monitoring – ResponsibilityMonitoring – Responsibility

The responsibility for the Firm’s monitoring The responsibility for the Firm’s monitoring process should be entrusted to a partner or other process should be entrusted to a partner or other persons with sufficient and appropriate persons with sufficient and appropriate experience and authority in the firm to assume experience and authority in the firm to assume responsibilityresponsibility



DocumentationDocumentation

The firm should establish policies and procedures The firm should establish policies and procedures requiring appropriate documentation to provide requiring appropriate documentation to provide evidence of the operation of each element of its evidence of the operation of each element of its system of quality controlsystem of quality control



The Way ForwardThe Way Forward

Self reviewSelf review Firm should review itself and remedy deficiencies Firm should review itself and remedy deficiencies

that that can easily can easily be be identifidentifiedied Use of the checklists developed byUse of the checklists developed by ICPAK ICPAK

encouragedencouraged

For a sole practitioner to demonstrate compliance with For a sole practitioner to demonstrate compliance with Para 60 ISQC1, ensuring that his work is independently Para 60 ISQC1, ensuring that his work is independently reviewed:reviewed:

Firms should establish working arrangements with Firms should establish working arrangements with other practitionersother practitioners



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QUALITY CONTROL STANDARDS CPA ALFRED LAGAT. 1.You are in a cabin and it is pitch black. You have one...

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