Podcast
Questions and Answers
What is the primary purpose of a firm's quality management system?
What is the primary purpose of a firm's quality management system?
- To ensure the firm and its personnel comply with professional standards, legal, and regulatory requirements. (correct)
- To ensure the firm's financial performance is strong.
- To ensure the firm's engagement reports are appropriate in all circumstances.
- To ensure the firm has the latest technology and software.
Which of the following is NOT a component of a quality management system?
Which of the following is NOT a component of a quality management system?
- Using statistical sampling techniques. (correct)
- Obtaining, developing, using, maintaining, allocating, and assigning resources.
- Complying with laws and regulations.
- Considering audit risk and materiality.
PSQM 1 applies to which of the following?
PSQM 1 applies to which of the following?
- Audits of financial statements.
- Reviews of financial statements.
- Other assurance or related services engagements.
- All of the above. (correct)
Which of the following is NOT a step in the risk-based approach to designing, implementing, and operating a system of quality management?
Which of the following is NOT a step in the risk-based approach to designing, implementing, and operating a system of quality management?
Who is responsible for the engagement, its performance, and the report issued on behalf of the firm?
Who is responsible for the engagement, its performance, and the report issued on behalf of the firm?
Which of the following components is NOT specifically addressed by the firm's system of quality management regarding policies and procedures?
Which of the following components is NOT specifically addressed by the firm's system of quality management regarding policies and procedures?
Which quality management component is MOST closely associated with promoting a culture of quality?
Which quality management component is MOST closely associated with promoting a culture of quality?
Which quality management component is primarily addressed by the firm establishing policies and procedures to ensure compliance with ethical requirements?
Which quality management component is primarily addressed by the firm establishing policies and procedures to ensure compliance with ethical requirements?
According to the Code of Ethics for Professional Accountants in the Philippines, which of these is NOT a fundamental principle of professional ethics?
According to the Code of Ethics for Professional Accountants in the Philippines, which of these is NOT a fundamental principle of professional ethics?
A CPA firm may maintain records indicating partners or staff previously employed by its clients for which reason?
A CPA firm may maintain records indicating partners or staff previously employed by its clients for which reason?
When a CPA firm establishes quality management policies and procedures for client acceptance, what is one of the PRIMARY purposes?
When a CPA firm establishes quality management policies and procedures for client acceptance, what is one of the PRIMARY purposes?
Which quality management component defines the process that the firm follows to implement a risk-based approach across its quality management system?
Which quality management component defines the process that the firm follows to implement a risk-based approach across its quality management system?
What key aspect of quality management is most likely to be affected by a firm's failure to properly assess and manage risks?
What key aspect of quality management is most likely to be affected by a firm's failure to properly assess and manage risks?
Flashcards
Quality Management System
Quality Management System
A system ensuring compliance with professional standards and legal requirements.
Components of Quality Management
Components of Quality Management
Includes audit risk, resource management, and legal compliance.
PSQM 1 Applicability
PSQM 1 Applicability
Applies to audits, reviews, and other assurance engagements.
Risk-Based Approach
Risk-Based Approach
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Engagement Partner
Engagement Partner
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Quality Management Policies
Quality Management Policies
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Culture of Quality
Culture of Quality
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Partner Records
Partner Records
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Relevant ethical requirements
Relevant ethical requirements
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Code of Ethics principles
Code of Ethics principles
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Risk assessment process
Risk assessment process
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Acceptance of new clients
Acceptance of new clients
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Study Notes
Quality Management Systems (QMS) in CPA Firms
- QMS Purpose: A QMS ensures firm and personnel fulfill responsibilities according to professional standards, legal requirements, and engagement standards; also ensures engagement reports are appropriate. (Both A & B correct)
Components of a QMS
- Core QMS Components: A QMS addresses considering audit risk and materiality, obtaining, developing, using, maintaining, allocating resources, and complying with laws and regulations. (Options A, B, and D are relevant)
- Risk-Based Approach: The QMS uses a risk-based approach, identifying and assessing risks to quality objectives, and designing responses to address those risks. (Option D is correct).
- PSQM 1 Scope: PSQM 1 applies to all firms performing audits or reviews (financial or otherwise) as well as various assurance or related services engagements. (Option D is correct.)
Key Individuals & Roles
- Engagement Partner: This partner, or another firm-appointed individual, oversees the engagement, its execution, and the report's issuance.
Key QMS Policies
- Essential QMS Policies: The QMS includes policies addressing Governance and Leadership, Relevant Ethical Requirements, Information and Communication.
Culture & Ethics
- Quality Culture: Promoting a quality culture is primarily associated with governance and leadership. (C is correct)
- Ethical Compliance: The QMS emphasizes compliance with relevant ethical requirements, as outlined in the ethics code, including integrity, objectivity, professional behavior but not relevance. (C, and options A, B, & D are relevant components of a QMS)
Client Acceptance & Retention
- Client Acceptance Considerations: Establishing policies and procedures for client acceptance and retention is a critical QMS component that considers the CPA firm's duty to the public and potential integrity concerns of clients.
Process & Risk Management
- Risk-Based Approach Implementation: The firm's risk assessment process outlines how to apply the risk-based approach to its QMS. (C is correct)
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