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BSA 3104 Philippine Standards on Quality Control

The document outlines the Philippine Standards on Quality Control, detailing essential elements such as leadership responsibilities, ethical requirements, client relationship management, human resources, engagement performance, and monitoring. It emphasizes the importance of establishing a culture of quality within firms and ensuring compliance with professional standards. Additionally, it describes the processes for engagement quality control review, including evaluation of independence, risk assessment, and communication of findings.

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Patrick Baga
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1 views18 pages

BSA 3104 Philippine Standards on Quality Control

The document outlines the Philippine Standards on Quality Control, detailing essential elements such as leadership responsibilities, ethical requirements, client relationship management, human resources, engagement performance, and monitoring. It emphasizes the importance of establishing a culture of quality within firms and ensuring compliance with professional standards. Additionally, it describes the processes for engagement quality control review, including evaluation of independence, risk assessment, and communication of findings.

Uploaded by

Patrick Baga
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Philippine Standards on

QUALITY CONTROL
Elements of Quality Control
a)Leadership responsibilities for quality within the firm
b)Ethical requirements
c)Acceptance and continuance of client relationships and
specific engagements
d)Human resources
e)Engagement performance
f) Monitoring
HEAL ME
a top Management

a) Leadership responsibilities for quality within


the firm

The firm should establish policies and procedures designed to promote an


internal culture based on the recognition that quality is essential in performing
engagements.
senior managers

Corporation -

top management

charged
with
governance
b) Ethical Requirements
▪ Communicate its independence requirements to its personnel and, where
applicable, others subject to them; and
▪ Identify and evaluate circumstances and relationships that create threats to
independence, and to take appropriate action to eliminate those threats or
reduce them to an acceptable level by applying safeguards, or if considered
appropriate, to withdraw from the engagement.
▪ At least annually, the firm should obtain written confirmation of compliance
with its policies and procedures on independence from all firm personnel
required to be independent by the Philippine Code.
c) Acceptance and Continuance of Client
Relationships and Specific Engagement
▪ Has considered the integrity of the client and does not have the information
that would lead it to conclude that the client lacks integrity;
▪ Is competent to perform the engagement and has the capabilities, time and
resources to do so; and
▪ Can comply with ethical requirements
c) Integrity

▪ The identity and business reputation of the client's principal owners, key
management, related parties and those charged with its governance

▪ The nature of the client's operations, including its business practices

▪ Information concerning the attitude of the client's principal owners, key


management and those charged with its governance towards such matters as
aggressive interpretation of accounting standards and the internal control
environment

▪ Whether the client is aggressively concerned with maintaining the firm's fees as
low as possible
·
c) Integrity

▪ Indications of an inappropriate limitation in the scope of work

▪ Indications that the client might be involved in money laundering or other criminal
activities

▪ The reasons for the proposed appointment of the firm and non-reappointment of
the previous firm

▪ The extent of knowledge of a firm will have regarding the integrity of a client will
generally grow within the context of an ongoing relationship with that client
c) Capabilities, Competence, Time and Resources

▪ Firm personnel have knowledge of relevant industries or subject matters;

▪ Firm personnel have experience with relevant regulatory or reporting


requirements, or the ability to gain the necessary skills and knowledge effectively;

▪ The firm has sufficient personnel with the necessary capabilities and competence;

▪ Experts are available, if needed;


c) Acceptance and Continuance of Client
Relationships and Specific Engagement
▪ Individuals meeting the criteria and eligibility requirements to perform
engagement quality control review are available, where applicable, and

▪ The firm is able to complete the engagement within the reporting deadline
c) Where the firm obtains information that would
have caused it to decline
▪ The professional and legal responsibilities that apply to the circumstances,
including whether there is a requirement for the firm to report to the person or
persons who made the appointment, or, in some cases, to regulatory authorities;
and

▪ The possibility of withdrawing from the engagement or from both the engagement
and the client relationship.
d) Human Resources

▪ Recruitment
▪ Promotion
▪ Performance evaluation
▪ Compensation
▪ Capabilities
▪ The estimation of
▪ Competence personnel needs

▪ Career development
e) Engagement Performance

▪ Through its policies and procedures, the firm seeks to establish consistency in the
quality of engagement performance. This is often accomplished through written or
electronic manuals software tools or other forms of standardized documentation,
and industry or subject matter-specific guidance materials.
e) Engagement Performance
1. How engagement teams are briefed on the engagement to obtain an
understanding of the objectives of their work

2. Processes for complying with applicable engagement standards

3. Processes of engagement supervision, staff training and coaching

4. Methods of reviewing the work performed, the significant judgments made and
the form of report being issued

5. Appropriate documentation of the work performed and of the timing and extent of
the review

6. Processes to keep all policies and procedures current


f) Monitoring
The purpose of monitoring compliance with quality control policies and procedures is
to provide an evaluation of:

1. Adherence to professional standards and regulatory and legal requirements;


2. Whether the quality control system has been appropriately designed and
effectively implemented; and
3. Whether the firm's quality control policies and procedures have been appropriately
applied, so that reports that are issued by the firm or engagement partners are
appropriate in the circumstances.
f) Monitoring
At least annually, the firm should communicate the results of the monitoring of its
quality control system to engagement partners and other appropriate individuals
within the firm, including the firm's chief executive officer or, if appropriate, its
managing board of partners.
Engagement Quality
Control Reviewer
Engagement Quality Control Review
a) The engagement team's evaluation of the firm's independence in
relation to the specific engagement.
b) Significant risks identified during the engagement and the
responses to those risks.
c) Judgments made, particularly with respect to materiality and
significant risks
d) Whether appropriate consultation has taken place on matters
involving differences of opinion or other difficult or contentious
matters, and the conclusions arising from those consultations
Engagement Quality Control Review
e) The significance and disposition of corrected and uncorrected
misstatements identified during the engagement
f) The matters to be communicated to management and those
charged with governance and, where applicable, other parties such
as regulatory bodies
g) Whether working papers selected for review reflect the work
performed in relation to the significant judgments and support the
conclusions reached
h) The appropriateness of the report to be issued.

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