This is the second part of a two-part article on enhancing QAP and ISQM compliance. Previously, Part 1: Enhancing Audit Quality: Key ISQM Findings from QAP and MIA Practice Review outlined the findings from the QAP and MIA Practice Review Reports which highlight the pressing need for audit firms to reinforce their ISQM frameworks. The increasing complexity of regulatory requirements and changes in audit risks necessitate a structured and proactive approach to quality management.
Both of the aforementioned reports provide specific recommendations to help firms enhance audit quality and establish a robust compliance framework. The effectiveness of an audit firm’s quality management system depends on its ability to implement structured policies, ensure accountability, and continuously refine processes in response to regulatory updates and emerging risks.
Below are the key recommendations derived from the MIA Practice Review Report 2024 and QAP reports that audit firms can take to fortify their quality management systems.
Recommendations for Enhancing ISQM Compliance Based on the Common Findings
By implementing these recommendations, audit firms can significantly strengthen their ISQM frameworks, ensuring better compliance with regulatory expectations while enhancing overall audit quality.
A proactive approach to ISQM compliance not only elevates firm-wide audit quality but also:
- Enhances the reputation and credibility of the firm.
- Reduces the risk of regulatory non-compliance and penalties.
- Improves engagement quality and client trust.
- Promotes a culture of continuous improvement in audit practices.
The insights from the MIA Practice Review and QAP reports facilitate the development of a structured roadmap for firms seeking to embed a culture of quality management. Firms that take these recommendations seriously will be better positioned to navigate the evolving regulatory landscape while upholding the highest standards of audit excellence.
To ensure ongoing success, audit firms must commit to:
- Regular training and education on ISQM principles.
- Continuous monitoring and improvement of quality management processes.
- Leveraging technology to streamline quality control and documentation.
By strengthening ISQM compliance, firms not only meet regulatory obligations but also build resilience and long-term success in an increasingly complex audit environment.
Voluntary ISQM review through the Quality Assessment Programme (QAP)
Audit firms can have their ISQM implementation reviewed by undergoing a voluntary assessment under the QAP initiative, a joint collaboration between MIA and MICPA towards promoting continuous improvement in audit quality in Malaysia. This assessment provides firms with valuable insights into their compliance with ISQM requirements and helps identify areas for improvement. Upon conclusion of the assessment, firms will receive feedback and be given a quality improvement period up to 24 months after the completion of QAP (provided the whole process starting from the audit firm’s enrolment in the QAP Programme does not exceed 36 months), to implement their remediation plan. This process allows firms to address any identified gaps, enhance their quality management systems, and ultimately strengthen overall compliance with ISQM.
(Note: Under normal circumstances, QAP participating firms will not be selected for practice review by MIA during the 24-month improvement period, except for firms referred by other regulators for inspection / investigation / disciplinary action or arising from a risk-based assessment.)
Firms interested in participating are required to complete the Practice Profile Information Questionnaire by clicking here and forwarding the completed questionnaire to the SMP Department at [email protected]. This questionnaire helps QAP reviewers gain a better understanding of the firm’s practice.
For more information about the QAP, please visit MIA website.
This is Part 2 of an article on QAP and ISQM Compliance. To read Part 1: Enhancing Audit Quality: Key ISQM Findings from QAP and MIA Practice Review, click here.
