SOCPA, represented by Audit Standards Committee, approves the amendments introduced by the IASB to ISA No. 220 "Quality Control for an Audit of Financial Statements". Such approval was preceded by an examination of IASB’s amendments, as well as satisfaction of SOCPA’s procedures to follow developments of international standards, and respond to inquiries and issues that are not addressed by international standards.
Accordingly, the committee decided to approve the amended ISA No. 220 "Quality Control for an Audit of Financial Statements" for application in Saudi Arabia as issued by IASB.
Most notable changes in the amended ISA No. 220 "Quality Control for an Audit of Financial Statements" are:
• The standard has generally been revised and its title modified in line with the quality management standards that replaced ISQC 1.
• References and referrals have been changed from the old quality control standard to the new quality management standards.
• Further details have been added with regards to the responsibilities contained in paragraph 3 of the standard, in line with the new Quality Management Standards and in the context of audit engagements.
• The appointment and responsibilities of the engagement quality reviewer have been moved from this standard to the new ISQM 2 "Engagement Quality Reviews", which has replaced along with the new ISQC 1 "Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements", the old ISQC 1 "Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements".
• The principle of "scalability" has been adopted in all amended standards with any reference to smaller entities.
• In the amended standard, it was emphasized that the implementation of high quality audit engagements serves the public interest by achieving the objectives of the audit standards, and that achieving the objectives of the standards and complying with the requirements of the laws and regulations requires the exercise of professional judgment and professional skepticism.
• The phrasing of the standard on the responsibilities of the engagement partner with regard to the requirements of the standard has been improved, so that his/her responsibility is indicated in the requirements in which he/she is allowed to entrust the drafting or execution of procedures to the members of the engagement team. The phrasing now makes note that the partner responsible for the engagement must meet the same requirements as the partner himself/herself.
• One of the objectives of the standard has been modified: instead of the objective of providing reasonable assurance as to "the firm's commitment to the applicable professional standards and legal and regulatory requirements", which in fact is the objective of the quality management standard at the firm's level, the primary objective of the standard has now become "The auditor fulfills his responsibilities and conducts the audit, in accordance with applicable professional standards and regulatory requirements"
• The amended standard provides more detailed requirements regarding the responsibilities of the engagement partner to lead the quality management. It also provides multiple application guidance to facilitate the application of these requirements whether with respect to the scalability principle, the level of participation of the engagement partner in the engagement, how to communicate with team members, how to exercise professional skepticism, or how to assign procedures or tasks to team members.
• The amended standard gives more details on the requirements for compliance with relevant ethical requirements, including those related to independence, and provides detailed application guidance to facilitate the understanding and application of those requirements.
• The amended standard expands now on the availability, efficiency and usage of the engagement resources, and provides detailed application guidance to facilitate the understanding and application of those requirements.
• The standard provides detailed application guidance to facilitate the understanding and application of the requirements of the standard relating to the engagement performance, whether in terms of direction, supervision, review, documentation, consultation on difficult matters, or possible differences of opinion and how to deal with it, as well as monitoring the work of the team and correction of what needs to be corrected.
• The amended standard expands on the requirements for how the partner in charge of the engagement verifies that he/she has overall responsibility for Quality Management and its implementation in the audit engagement. the standard also provides detailed application guidance to facilitate understanding and application of the standard's requirements in this regard.
The amended standard can be accessed by clicking here.