ISQC 1 Summary : Quality Control for Firms that Perform Audits and

Reviews of Financial Statements, and Other Assurance and Related Services

Engagements

Scope of ISQC 1
- Firm’s responsibilities for its system of quality control for audits and reviews of
financial statements, and other assurance and related services engagements.

Authority of this ISQC “Para 5-1”

- Applies to all firms of professional accountants in respect of audits and reviews of
financial statements, and other assurance and related services engagements

Effective date of ISQC 1: 15 December 2009

Objective of ISQC 1 “Para 11”
- To establish and maintain a system of quality control to provide with reasonable
assurance that
1. The firm and its personnel comply with professional standards and applicable legal
and regulatory requirements; and
2. Reports issued by the firm or engagement partners are appropriate in the
circumstances.

Definitions “Para 12”

Requirements of ISQC 1 “Para 13-59”

> Personnel responsible for establishing and maintaining the firm’s system of quality
control shall have understanding of this ISQC 1.
> Comply with all requirement of this ISQC 1 unless not applicable.
> Additional requirement may need to be established in addition to ISQC 1 for
fulfillment of objective of ISQC 1.

Elements of a System of Quality Control

1. Leadership Responsibilities for Quality within the Firm

* Firm’s chief executive officer (or equivalent) or, if appropriate, the firm’s managing
board of partners (or equivalent) shall assume ultimate responsibility for the firm’s
system of quality control.
*Firm’s chief executive officer or managing board of partners shall have sufficient and
appropriate experience and ability, and the necessary authority, to assume that
responsibility.

2. Relevant Ethical Requirements

* Firm and its personnel shall comply with relevant ethical requirements.

3. Independence
* Firm shall communicate its independence requirements to its personnel and, where
applicable, others subject to them.

* Identify and evaluate circumstances and relationships that create threats to

independence, and to take appropriate action.

* Engagement partner shall provide information about the client and engagement to
evaluate impact on independence requirement.

* Personnel shall promptly notify the firm of circumstances and relationships that create
a threat to independence

* accumulation and communication of relevant information to appropriate personnel for

satisfaction of independence requirement.

* Personnel shall promptly notify the firm of independence breaches of which they
become aware.

* The firm to promptly communicate identified breaches to responsible engagement

partner.

* Communicate the action taken to resolve the issue.