Select Page

The accountancy profession has a significant role to play in promoting economic growth and business sustainability and therefore requires professionals to deliver quality services to business and entrepreneurs who rely on financial statements to make effective business decisions that contribute to the value chain and economic systems. This is important, as the public trusts and relies on the work of accountancy professionals to hold businesses accountable for contributing to economic activities.

The International Auditing and Assurance Standards Board (IAASB) requires firms and practitioners that perform audits and reviews of financial statements and other assurance and related services engagements – this includes the entire accountancy profession where the public and external parties rely on the financial statements of businesses, to have a system of quality management (QM) in place by December 2022, designed and implemented in accordance with the Quality Management Standards (ISQM) In preparing for the new ISQM 1 and 2. SAIPA developed a Quality Assurance and Practice Review Framework (QAPRF) in 2021, which was approved in February 2022.

Quality management is a key feature of the profession and SAIPA has embraced this as part of its self-regulatory responsibility. Other self-regulatory features of the Institute are based on its competency frameworks that meet current changes in the profession. This is to ensure that members’ competencies are up to date with changes in the profession, legislation and regulations, and accountability to SAIPA for compliance in governing the professional conduct of members to retain trust in the profession. Inspections and reviews are some of SAIPA’s crucial regulatory functions that give effect to its commitment to protecting the public interest by encouraging its members and strategic stakeholders in the supply chain of awarding professional designations to pursue consistent sustainable quality reviews that adhere to the highest standards while maintaining good professional relationships.

For Sechaba Motaung, SAIPA’s Quality Assurance and Practice Review Manager, the primary benefit of the new quality management standard is simple: “Better recoverability, greater profit; that’s what comes from good quality management.”

Expanding on the positive reputational impacts that ISQM 1 can have for smaller firms, he adds that with financial statement compilations being heavily dependent on client interaction, the focus on quality will be apparent to clients, thus improving the practice’s reputation. In the longer term, it may also make practice reviews considerably easier, by reducing the number of queries. This is also applicable in terms of file reviews.


ISQM 1, previously International Standard on Quality Control 1 (ISQC 1), covers a firm’s responsibility to design, implement and operate a quality management system for audits, reviews of financial statements, or other assurance/related services engagements. The standard was issued in December 2020 to respond to the need for a robust risk-based approach to quality management.


ISQM 1 applies to all firms in professional practice rendering services to clients, to implement structures that not only ensure compliance with legislation, regulations, and standards but also minimise the risks associated with performing engagements.


ISQM 1 requires that firms adopt a risk-based approach in a coordinated and interrelated manner so that they can effectively manage the quality of engagements in their purview. Under ISQM 1, a quality management system addresses eight components.

This risk-based approach is embedded in establishing quality objectives, identifying, and assessing risks to achieve quality objectives, and designing and implementing responses to address the quality risks. The standard also requires that individuals responsible for managing quality objectives assess the quality management system at least once a year to determine whether it allows for the achievement of such quality objectives. ISQM 1 also calls for Root Cause Analysis (RCA) when it comes to risk assessment. RCA relates to identifying the underlying cause of a problem and providing solutions to prevent a re-occurrence. The analysis works by examining patterns of effects with negative outcomes as there could be multiple factors that cause a problem. As a result, varying solutions will arise from the strings of patterns investigated. This paves the way for a reprisal are to identify the problem, gather data, analyse it, and then solve it. Furthermore, the monitoring and remediation process is important in a firm’s system of quality management (SoQM). It is imperative to note that there is no need to establish a system without necessary procedures for monitoring, as monitoring ensures the effectiveness and efficiency of the overall quality system. A firm is expected to saddle this responsibility to a dedicated quality team, depending on the capacity of the firm, for effective performance.

In designing the firm’s quality management system, it should consider:

  • The type of services that will be rendered, the target market and the structure of the practice including its risk appetite and risk threshold
  • The nature and circumstances of the firm, this includes its size, availability of resources to monitor or handle specific tasks, as well as the extent of use or reliance on information systems, including network service providers, etc.
  • The nature and circumstances of the engagements performed by the firm. This will include the client’s size, risk exposure, and whether the client is a Public Interest Entity (PIE), etc.; it’s important also to note that quality management principles should be applied consistently to all clients but the risk threshold may change
  • Generally, the complexity and formality in the design of a system will vary according to the firm’s size and the portfolio that is handled. The standard also addresses firms belonging to a network and firms that use resources from service providers to manage their quality system or in engagements.
  • Even when a firm complies with the network requirements, uses network services or resources from a service provider (component auditors), it is responsible for its quality management system.


Improving a firm’s quality management system is a continuous process that may evolve. Considering this, SAIPA has developed webinars, and workshops and will provide further training, guidance and assistance to its members in practice to meet the December 2022 deadline.

Click on these links for recordings of:

Inspections and Reviews Webinar

Risk-Based Approach

Questions and queries can be directed to Sechaba Motaung via

*While this article focuses on the rationale and requirements for members in practice to put a system of quality management (SOQM) in place by December 2022. The next article will explore SAIPA’s practice approach and procedures.