Annual SoQM evaluations

All audit firms must fully engage with the International Standard on Quality Management ISQM 1/ISQM (UK) 1. A first evaluation of the firm’s system of quality management (SoQM) was required by 15 December 2023 and further evaluations must be performed at least annually. 

This is an area of focus by the Financial Reporting Council and reviewers in ICAEW’s Quality Assurance Department (QAD) expect to see the conclusion documented, along with details of the results of the firm’s monitoring that it has assessed to reach its conclusion.

On the majority of audit monitoring visits, QAD reviewers do find that audit firms have now undertaken their first evaluation at least, but there are some that have not, and so have not complied with the Audit Regulations. 

All firms may benefit from reading a summary of what QAD is looking for in an annual SoQM evaluation, which issues would cause concern, and how engaging with QAD reviewers can help firms to avoid recurrences.

Audit & Beyond resources that may also be of help include:

• Learning from annual SoQM appraisals;
• Maintaining ISQM 1 momentum; and our
• Quality management in audit firms hub.

Updated Audit Regulations

UK Audit Regulations were updated during 2023, more changes come into effect from 1 October 2024 and other changes are expected from early 2025. Individual ICAEW members, ICAEW member and regulated firms, and non-members who are registered with ICAEW for statutory audit, may be affected.

The changes relate to:

• continuing professional development (CPD);
• compulsory alternates for sole practitioners;
• sanctioning of responsible individuals (RIs) by the Audit Registration Committee;
• a firm’s eligibility to be audit registered; and 
• mandatory notification of movement of audits.

The updates are being staggered to give firms time to adapt and to ensure compliance. 

To understand what is happening, when and why, read about:

• changes to UK Audit Rules from 1 October 2024 and the roadmap for coming changes;
• feedback on proposed changes to CPD, compulsory alternates, RI sanctions, and ICAEW responses;
• revised audit eligibility requirements and whether your firm will meet them; and 
• the proposed notification of movement of audits and related criteria (and consultation on this).

Topical and technical webinars

Don’t forget to book your place for these forthcoming webinars:

• CASS 5 audits 2024 (17 October 2024, 10-11.30 BST); and
• Hot topics and tips for 2025 audits (11 November 2024, 14-15.30 BST).

Recent additions to the Audit and Assurance Faculty webinar library include:

• Tips and common pitfalls in preparing and auditing cash flow statements; 
• Practical tips for the auditor’s review of management spreadsheets;
• Global sustainability reporting and assurance – your questions answered;
• Introduction to CSRD and SEC climate reporting and assurance requirements; and 
• Making sense of sampling and substantive analytical review.

Technical updates

The Audit & Assurance Faculty makes technical news from regulators and standard-setters available in Technical news in brief. This can also be accessed from the Audit & Beyond hub page.