Экономика/ 7. Учет и аудит

Tokhtarova I.N., Moiseeva F.A.

Donetsk National University of Economics and Trade

Named After Mikhailo Tugan-Baranovsky

System of Quality Control for an Audit of Financial Statements

Nowadays there is a lack of practical using of systems of quality control for an audit of financial statements in Ukraine.

Ahrens and Loebbecke offer the following definition: “Quality control - a procedure used by audit firms and help it follow generally accepted standards during audit”.

This International Standard on Auditing (ISA) deals with the specific responsibilities of the auditor regarding quality control procedures for an audit of financial statements. It also addresses, where applicable, the responsibilities of the engagement quality control reviewer. “This ISA is to be read in conjunction with relevant ethical requirements” [1].

According to ISA 220 “Quality Control for an Audit of Financial Statements” quality control systems, policies and procedures are the responsibility of the audit firm. Under ISQC 1, the firm has an obligation to establish and maintain a system of quality control to provide it with reasonable assurance that:

- The firm and its personnel comply with professional standards and applicable legal and regulatory requirements; and

- Reports issued by the firm or engagement partners are appropriate in the circumstances.

This ISA is premised on the basis that the firm is subject to ISQC 1 or to national requirements that are at least as demanding. It is necessary to add that Ukrainians legislation base in the field of system of quality control for an audit of financial statements is unseemly, because it has a lot of shortage lack.

According to ISA 220 Within the context of the firm’s system of quality control, engagement teams have a responsibility to implement quality control procedures that are applicable to the audit engagement and provide the firm with relevant information to enable the functioning of that part of the firm’s system of quality control relating to independence.

Engagement teams are entitled to rely on the firm’s system of quality control, unless information provided by the firm or other parties suggests otherwise [1].

Since June 2005 the International Standard on Quality Control 1 (ISQC 1) has required firms to establish and record quality control policies and procedures regarding audit and assurance work.

ACCA's practice monitoring team has now developed a practical guide, International Standard on Quality Control 1: Practical Guidance for Small- and Medium-Sized Audit Firms, to help ACCA firms across the globe implement the requirements of ISQC 1.

ISQC 1 requires firms to implement a system of quality control that should include policies and procedures addressing each of the following elements:

- leadership responsibilities for quality within the firm

- ethical requirements

- acceptance and continuance of client relationships and specific engagements

- human resources

- engagement performance

- monitoring.

Weaknesses in a firm's quality control procedures over audit and regulatory work will often result in the firm's failure to achieve a satisfactory outcome to an audit monitoring visit. The guide has been written to encourage firms to improve their quality control procedures so that they are more likely to consistently achieve a satisfactory standard in their audit and assurance work, and comply with the ethical requirements [3].

It is necessary to stress, that the firm must establish and maintain a system of quality control. The system of quality control should include policies and procedures addressing each of the following elements:

1. Leadership responsibilities for quality within the firm (the tone at the top)

2. Relevant ethical requirements

3. Acceptance and continuance of client relationships and specific engagements

4. Human resources

5. Engagement performance

6. Monitoring

Policies and procedures established by the firm related to each element are designed to achieve reasonable assurance with respect to the purpose of that element [2].

Firms with effective quality control systems not only continuously improve the quality of their services and comply with professional standards; significant additional benefits abound. These firms are more competitive in the marketplace, both for employees and clients; they also are supple, and have a culture of accountability and inclusiveness that values great work and ethical conduct. They communicate and manage risks proactively. Because they are competitive and avoid problems, they generate excellent profits. Reputations are priceless and these firms maintain high marks with clients, prospective employees, regulators, and other members of the business community.

Literature

1. International Standard on Auditing 220 “Quality Control for an Audit of Financial Statements” / Internet resource [access mode]: http://web.ifac.org/clarity-center/the-clarified-standards

2. Statement on quality control standards - a firm's system of quality control (redrafted) / Journal of Accountancy – December 1, 2010 – Internet resource [access mode]: http://www.highbeam.com/doc/1G1-243956205.html

3. ISQC 1: practical guidance/ Internet resource [access mode]: http://www.accaglobal.com/allnews/members/2010/NEWSQ1/Features/3291392

4. A. Ahrens and J. Loebbecke. Auditing: An Integrated Approach / Internet resource [access mode]: http://www.abebooks.com/products /isbn/9780130827357/