IFAC Releases Final Guide for Small Firms on New Quality Management Standards
The International Federation of Accountants (IFAC) has published the third and final part of its guide to help small- and medium-sized practices (SMPs) implement the new International Standards on Quality Management – ISQM1. The standards officially replaced the previous ISQC1 on 15 December 2022. The shift marks a significant change in how firms approach quality management, requiring a more proactive system that focuses on preventing quality issues rather than simply responding to them.
ISQM1 applies to all accounting firms and practices – does not matter how small your practice is, you need to ensure that quality management of your services.
What’s in the Final Installment?
The third installment, Monitoring and Remediation, provides guidance on how firms can monitor their quality management system, identify any deficiencies, and take corrective actions. It emphasises:
How to determine the nature, timing, and extent of monitoring activities
How to evaluate deficiencies, their causes, and their severity
How to set up a process to respond to these deficiencies and communicate the findings within the firm
The importance of continuous improvement through ongoing evaluation
Additionally, the guide includes helpful tools such as templates for annual reviews, engagement inspections, and remediation reports. These are designed to simplify the monitoring process for small firms.
Recap of Earlier Installments
IFAC’s three-part series on quality management has been invaluable for small accounting firms. Here’s a quick overview of the previous installments:
Installment One focused on the mindset shift required by the new standards, moving from a reactive approach (quality control) to a proactive one (quality management). It introduced the key principles of ISQM 1 and explained the new focus on managing risks to quality.
Installment Two offered a step-by-step guide on setting up a system of quality management. It walked firms through identifying quality objectives, conducting a quality risk assessment, and establishing the necessary responses to those risks. This installment also included an example case study showing how to transition from the old ISQC 1 standard to the new ISQM 1 framework.
Each part of the series builds on the previous one, offering practical advice and tools to make the transition smoother for SMPs.
Why You Should Know About This
For South African accountants, especially those working in small firms, the transition to ISQM 1 is crucial. The new standard places greater responsibility on firms to manage quality proactively and continuously improve their processes. The guidance from IFAC, especially in this third installment, ensures that firms have a clear path to compliance, helping them deliver high-quality services to clients and meet global standards.
Find more resources to support the implementation of ISQM 1, access webinars, articles, videos, and other practical tools on the IFAC website .
