By the MIA SMP Department
Despite facing challenges to sustain operations during the pandemic, the quest for continuous quality improvement was not forgotten by CWC & ENG PLT. What was it like to participate in the MIA-MICPA Quality Assessment Programme (QAP) during the COVID-19 pandemic? Eng Guo Miao and Kuan Ying Tung, partners of CWC & ENG PLT, share their insights.
CWC & ENG PLT, a 2-partner firm with more than 30 staff, has been around since 2018, wholly focusing on the provision of audit services. Eng and Kuan have 14 and 16 years’ experience in public practice respectively.
CWC & ENG PLT commenced the QAP from October 2020 and received its final report in June 2021. Eng and Kuan tell us about their experience below:
How did you know about the QAP Programme? What made you decide to sign up for the QAP?
I got to know about this programme through a circular from the MIA and thought that this would be good for the firm because we are committed to improving audit quality to serve our clients better.
Furthermore, as the firm is still relatively new, we thought it is importance for us to assess, remediate and thus set the right tone from the beginning with the guidance from the reviewers.
At the same time, this is a good opportunity for us to get an independent review of our firm’s policies and procedures.
The firm underwent the QAP during the COVID-19 pandemic, when the various MCO and SOPs were still in place. Could you please briefly describe the QAP Process during the MCO?
There were some communication hiccups initially and disruption to the normal review process flow due to the restrictions imposed during the Movement Control Order (MCO) or Conditional MCO. The timeline was delayed as expected and it took us more than 7 months to complete the whole process of QAP. Nevertheless, the overall experience is still good despite the delay in timeline and disruption to the normal QAP process.
Briefly, the process was as follows:
- First, there was a need to submit a duly completed Practice Profile Information Questionnaire, which was downloaded from the MIA SMP website. After initial checking, MIA then submitted the questionnaire to MICPA for further action.
- Prior to the entry meeting, the reviewer from MICPA would send a questionnaire with a list of documents required for QAP. Our firm was required to complete the questionnaire and prepare the documents for the QAP.
- Next, an entry meeting was conducted to obtain a better understanding of the firm’s policies and procedures and attended by partners, senior staff and the reviewer. This entry meeting was conducted virtually during the MCO.
- The reviewer conducted the review offsite for 4 days followed by a virtual exit meeting to discuss the findings. There was totally no physical meetings conducted during the review due to the pandemic.
- Our firm then prepared the remediation plan with the assistance of the reviewer. The final QAP report was then issued, highlighting the findings of the reviewer and the remediation plans to be undertaken by our firm.
What were your expectations when you signed up for the QAP?
With the QAP, we hope to get independent feedback on the audit quality of our firm and to obtain recommendations for improving our firm’s policies and procedures on ISQC1 and audit documentation quality.
What was your main take-away from the programme?
The main take-aways of the QAP are the findings on key shortfall areas by the reviewer and the discussion session with our QAP reviewer that helped us to get a better understanding of our weaknesses. The QAP reviewer also gave practical tips and resolutions to help us to devise improvement plans.
During the QAP, we managed to obtain guidance in interpreting some of the key requirements under auditing and quality control standards that we found quite challenging for us to interpret before. This is very useful for us as it could help us in performing the audit in a much more efficient manner while complying with the auditing standards.
In what way do you think the QAP will help you in your future audit?
The QAP helps our firm to better understand our current shortfall in audit quality and process. The QAP provides recommendations to improve audit quality for our future audit engagements.
For instance, when determining the sample size, it is important to document the justification and the linkage between risk assessment and sampling size.
In your opinion, is there any area that the QAP could be further improved?
Overall, the QAP process is well managed and coordinated. Some areas that we thought that could be further improved are as follows:
- The timeline should always be revisited and discussed together as the QAP is progressing so that the firm would be well informed on the status of the review.
- The discussion during the exit meeting could have been more thorough and extensive.
- Reviewers could consider scaling down requirements or guidance when reviewing firms with small-sized clients.
In your experience, do you consider the programme value for money?
Yes, it was value for money. We could see that the fee is already subsidised when we considered the actual time cost that the reviewer spent for our firm’s review. We gained a lot from the review. The reviewers were all from practice and they were superb. They could relate to the practical problems faced by SMPs.
Would you recommend that other SMPs participate in the QAP programme?
Yes, we recommend that other SMPs participate in QAP to seek continuous improvement in audit quality. Sole proprietors especially would benefit from the independent review on the firm’s ISQC1 policies and procedures.
Do you expect to enrol in the follow-up review in the near future?
Yes, we are looking to enrol in a follow-up review in the near future to assess the implementation of our remedial action plan.
Considering the imminent effective date of ISQM1, ISQM2 and ISA 220 (Revised), do you foresee the firm will be enrolling into this QAP again?
We will definitely consider enrolling for QAP maybe in the next one or two years to review the post implementation of our firms’ policies and procedures on ISQM1, ISQM2 and ISA 220.
In your opinion, do you think that the QAP is a good way to assess audit quality of an audit firm before the Practice Review? If yes, why?
Yes, the QAP is a good way to assess our audit quality and prepare us for the Practice Review by identifying our deficiencies/shortfalls and recommendations for audit quality improvement.
About the QAP
The Quality Assessment Programme (QAP) is a new initiative to enhance audit quality among SMPs. A joint collaboration between MIA and MICPA since the QAP agreement was first signed on 25 October 2016, the QAP signals MIA and MICPA’s commitment towards continuous improvement in the audit quality of SMPs in Malaysia.
How the QAP Works
The QAP is a structured review of a MIA Member firm by reviewer(s) appointed by MICPA. The review of the whole firm will comprise two parts:
- A review of the firm’s compliance with the International Standard of Quality Control (ISQC) 1, and;
- A review of the documentation of at least one completed audit engagement.
Participation in the QAP by SMPs is on a voluntary basis and designed to be educational in nature. The review will be conducted at the firms’ premises. At the end of the review period, the QAP reviewer(s) will provide a report on the findings and the reviewed firm will provide the proposed remedial action plans for implementation.
Objectives of the QAP
The QAP is designed to promote continuous improvement in audit quality in Malaysia.
It aims to assist audit firms in assessing compliance with the applicable auditing standards and MIA By-Laws in relation to audit engagements on financial statements prepared in accordance with the applicable approved accounting standards and the Companies Act 1965 or the Companies Act 2016, as the case may be.
Interested to participate?
SMPs (not registered with the Audit Oversight Board) that are interested to participate in the QAP are required to complete the Practice Profile Information Questionnaire by clicking here and forward the same to the SMP Department at [email protected]. The questionnaire will enable the QAP reviewer(s) to understand your practice better.