The document discusses changes to the monitoring and remediation processes under ISQM 1. It provides an overview of the new framework, including focusing on monitoring the system of quality management as a whole, and having a more robust process for evaluating findings, identifying deficiencies, and implementing remedial actions. The monitoring and remediation process is presented as an integrated and interactive cycle involving designing and performing monitoring activities, evaluating findings, responding to deficiencies, and communicating.

1. ISQM 1, Quality
Management for
Firms:
What’s New for Firms’
Monitoring and
Remediation
Processes
Webinar Series Part 3

2. ISQM 1: The Structure and Components
Page 2

3. Monitoring and Remediation: What has Changed?
Page 3
• Focus on monitoring the SOQM as a whole
• New framework for evaluating findings and identifying deficiencies, and evaluating
identified deficiencies
• More robust remediation
Modernized, promoting more proactivity and continual improvement
Why?
• Identify deficiencies so they can be remediated
• Information is needed about the SOQM - firm leadership, engagement partners and
others in the firm (including engagement quality reviewers)

4. The Monitoring and Remediation Process
Page 4
Communicate
Respond to Identified
Deficiencies
Evaluate Findings and
Identify Deficiencies,
and Evaluate Identified
Deficiencies
Design and Perform
Monitoring Activities
• Integrated and interactive process
• Operational responsibility for the monitoring and remediation process
• Policies or procedures for individuals performing monitoring activities
o Competence and capabilities (including sufficient time)
o Objectivity

5. Design and Perform Monitoring Activities
Page 5
All 8
components
Other
requirements
Periodic
monitoring
activities
Ongoing
monitoring
activities
Monitor the
system as a
whole

6. Design and Perform Monitoring Activities
Page 6
Examples of other factors: Size, structure, organization of firm, involvement of network, resources to be used
Reasons for assessments
given to the quality risks
Factors driving nature,
timing and extent of
monitoring activities
Changes in SOQM
Design of responses
Design of the firm’s risk
assessment process and
monitoring and
remediation process
Previous monitoring
activities /
effectiveness of
remedial actions
Other relevant information:
complaints and allegations,
external inspections,
service providers

7. Design and Perform Monitoring Activities: Engagement Inspections
Page 7
The factors that affect the
design of all monitoring
activities
Other
monitoring
activities
undertaken by
the firm
The cycle for the
selection of
engagement
partners
Selection:
• Engagements
• Engagement partners
Considerations in
making the selection

8. Evaluate Findings and Identify Deficiencies and Evaluate Identified Deficiencies
Page 8
Professional
judgment
Investigate the root cause
Evaluate the effect of deficiencies,
individually and in aggregate, on the SOQM
Evaluate the severity and
pervasiveness of
deficiencies (Para. 41)
Monitoring
activities
External
inspections
Other relevant
sources
Information about the design, implementation
and operation of the system of quality
management which indicates that one or
more deficiencies may exist.
Findings
(Para. 16(h)
Evaluate findings to determine
whether deficiencies exist (Para. 40)
Consider factors in para. A160
Deficiencies
(Para. 16(a))
A quality objective
required to achieve
the objective of the
SOQM is not
established
A quality risk or
combination of
quality risks, is not
identified or
properly assessed
A response, or combination of
responses, does not reduce to an
acceptably low level the likelihood of a
related quality risk occurring because the
response(s) is not properly designed,
implemented or operating effectively
An other aspect of the
SOQM is absent, not
properly designed, or not
operating effectively, such
that a requirement of ISQM 1
has not been addressed
Process
is
iterative
Information comes from:
Professional
judgment

9. Respond to Identified Deficiencies
Page 9
Also respond if findings on
engagements indicate
omitted procedures or an
inappropriate report
Design and implement
remedial actions
• Responsive to root cause
Evaluate remedial actions
• Are the remedial actions
appropriately designed to
address the identified
deficiencies and their related
root cause(s) and have they
been implemented?
• Are remedial actions that were
implemented for previous
deficiencies effective?
Take appropriate action
• Remedial actions are not
appropriately designed, not
implemented, or not effective

10. Communicate
Page 10
The firm communicates
to engagement teams and
others to enable them to
take prompt/appropriate
action
The individual
assigned operational
responsibility for
monitoring and
remediation
communicates to
other leadership

11. Questions

12. • Publications and published videos
– First time implementation guides
• Focus on key areas and more complex aspects of the standards
• Highlights key changes from extant standards
– Fact sheets
– Video: Initial implementation efforts
• Webinars
– Available on YouTube
• Webinar 1: All you need to know about the firm’s risk assessment process
• Webinar 2: Resources: Expectations for Firms and Engagement Partners
– Upcoming webinar
Implementation Support
Page 12
Topic Date Time
Other aspects of ISQM 1 18 August 2021 11am – 12pm GMT

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