Quality Management vs Quality Control: What’s the Difference? (Currently Unavailable)

Author: Pat Patterson

SQMS No.1, Statement on Quality Management Standards (SQMS), A Firm’s System of Quality Management supersedes Statement on Quality Control Standards (SQCS) No. 8, A Firm’s System of Quality Control (QC section 10). The Auditing Standards Board (ASB) last made significant changes to its quality control standards in October 2006 with the issuance of SQCS No. 7, A Firm’s System of Quality Control, superseding all previously issued SQCSs. SQCS No. 7 converged with the International Auditing and Assurance Standards Board’s (IAASB) International Standard on Quality Control (ISQC) 1, Quality Control for Firms That Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements. In November 2010, SQCS No. 8 was issued and superseded SQSC No. 7. SQCS No. 8 applied the ASB’s clarity drafting conventions to SQCS No. 7 without changing or expanding it in any significant respect.

Since then, the environment in which firms work has evolved. The power and use of technological resources have increased exponentially, both by businesses and by firms. The expectations of regulators, given high-profile business failures, are higher. In addition, the ASB has received feedback that SQCS No. 8 has a “one size fits all” approach that does not adapt well to differences in the size or nature of firms or their services.

SQMS No. 1 takes a new and different approach that emphasizes the responsibility of firm leadership for proactively managing quality, while at the same time being scalable to deal with differences in the size of firms and nature of the services they provide. The essence of the new approach is to focus firms’ attention on risks that may have an impact on engagement quality.

Unlike QC section 10, the new approach requires a firm to customize the design, implementation, and operation of its system of quality management based on the nature and circumstances of the firm and the engagements it performs. The new approach also requires the firm to transition from policies and procedures that address standalone elements, as required by QC section 10, to an integrated and iterative approach that reflects upon the system. The standard takes an initiative-taking approach to quality management, with an increased emphasis on a continual flow of remediation and improvement.

Publication Date: February 2023

Designed For
Professionals in management and public accounting, as well as other professionals with a “need to know” what the latest audit requirements, procedures, and techniques on quality management are.

Topics Covered

• Introduction to SQMS No. 1, Statement on Quality Management Standards (SQMS), A Firm's System of Quality Management
• Review of SQCS No. 8 and QC Section 10
• Review of Convergence with IAASB International Standard on Quality Control (ISQC) 1
• Review of New Issues from SQMS No. 1
• Impact on Audits, Reviews, and Compilation Engagements

Learning Objectives

• Identify, name, apply, and discuss the attributes of Quality Management as changed from Quality Control

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Accounting (1 hour), Auditing (1 hour)

Program Prerequisites
General understanding of auditing quality standards.

Advance Preparation
None