Business advisory and consulting play an increasingly important role in companies due to rapid technological changes, digitization and expansion into global markets. As we have mentioned countless times, the audit aims to harmonize the financial statements with the legislative framework, which gives a realistic picture of the business.
On August 29, 2022, the Croatian Audit Chamber published translations of international auditing standards and quality management standards. Article 14, paragraph 1 of the Audit Act requires that authorized auditors must constantly improve their auditing skills.
There are many changes and materials for improvement, so we introduce you to the International Quality Management Standard 1 and 2 (ISQM 1 and ISQM 2).
ISQM 1
International Quality Management Standard 1 regulates the quality management for companies that perform audits or reviews of financial statements or other assurance engagements or related services.
If the audit company performs any of the above-mentioned engagements, then this ISQM and the quality management system established by the requirements of this MSUK shall be applied. From the above results the consistent performance of the mentioned engagements and the issuance of an appropriate report.
ISQM 1 replaces the previous IQCS 1, and the difference is that ISQM 1 has a more proactive and comprehensive approach. Also, the emphasis is on quality management, not on quality control itself.
ISQM 1 becomes effective on December 15, 2022, for audits of financial statements beginning on or after that date.
ISQM 2
International Quality Management Standard 2 governs the appointment and eligibility of engagement quality reviewers and responsibilities related to the performance and documentation of reviews. It applies to all engagements that require an engagement quality review per ISQM 1. It is based on the assumption that the company is subject to ISQM 1 or national requirements that are at least as demanding. Also, it should be read together with the relevant ethical requirements.
ISQM 2 mandates expanding the scope of engagements that are subject to quality control, then tightening the conditions for the appointment of quality controllers and increasing the controller’s obligations in connection with implementation.
Like ISQM 1, ISQM 2 becomes effective for audits and reviews of financial statements and all other assurance engagements for periods beginning on or after December 15, 2022.
The importance of choosing a quality auditing company
Providing a strong and independent audit is key to building trust between businesses and stakeholders. Audit focus is always on the company, and individual adaptation leads to the development of more sustainable companies.
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