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The processes are all in place, Peo said, but documenting and testing them is a different challenge. “Some people thought the same thing about SOX 404 when they first implemented,” Peo said. “It was like, ‘How hard can that be?’ They already have the processes in place. And you pretty quickly realized, it’s a different exercise when you have to go through and document it all and then test it.” “My first piece of advice,” Haskell said, “would be to figure out where you are in relation to the new standard, figure out the quality objectives in the new standard, and line them up against what you’re measuring today as part of your system of quality control.” Experts say it’s critically important that the standards can be easily applied to audits of all levels of complexity at all the various sizes of firms. “There could be different challenges for different sets of firms, depending on how the standards are written,” said Brian Croteau, CPA, a partner in the National Quality Organization of PwC’s Assurance Practice and Regulatory Risk and Quality Control leader. “But the good news is that it seems the standard setters and regulators are focused on that issue and really are trying to think about how to write the standards, or in the IAASB’s case, already wrote the standard, in a way that they believe is sufficiently scalable to firms of all sizes.” Nonetheless, firms of different sizes will have different challenges with implementation. Smaller firms may struggle with this effort because they don’t possess the resources that larger firms can rely on for implementation. On the other hand, processes and controls at small firms that perform less-complex audits won’t be as complicated, so they will be easier to document. “When you have a huge firm, things can get pretty complicated just from a process standpoint because there are so many people and so many different types of audits,” Peo said. “I think smaller firms will have a challenge, but I think they’re probably just different challenges from larger firms.” Although implementation may be burdensome, experts say it’s worth it because they believe the standards ultimately will result in better performance on audits. “A strong system of quality control provides the framework for consistent execution of high-quality audits at the engagement level,” said Christine Davine, CPA, national managing partner for quality, risk, and regulatory for Deloitte & Touche LLP. “That framework then positions our engagement teams for success on their audits.” The standards add to a groundswell of support in the profession for improving the training, tools, and processes that lead to improved performance on audits. It has been almost seven years since the AICPA embarked on its Enhancing Audit Quality initiative, which has provided resources and guidance for firms and practitioners to use in their pursuit of continuous improvement. There may be challenging times ahead for auditors as they change their systems to reflect a risk-based approach and document processes and controls. But even if the implementation effort reminds auditors of SOX 404(b), there is a real opportunity ahead with the quality management standards. It would be possible for firm leaders to treat adoption like a compliance requirement, dutifully checking the boxes and documenting the controls to get the work completed so they can report that they are in compliance. But being thoughtful about the documentation can help firms take inspection findings and perform a root-cause analysis to find weaknesses in the system of quality management and fix them so that improvement becomes continuous. “I see this as a great opportunity,” Haskell said. “Some firms might see this as an overwhelming exercise, but … this is a good standard and one that will benefit us from thinking about things a little bit differently, perhaps documenting things a little bit differently. Overall, the fact that it’s modernized and helps firms think about their system of quality control, which is such a fundamental topic, I think it is great.” Ultimately, it’s hoped that the new standards and continued commitment to improvement in the profession will lead to better audit quality and as a result will bring benefits to investors and the capital markets.

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