APES 320 Quality Management for Non-Assurance Services

Objectives

APES 320 Quality Management for Firms that provide Non-Assurance Services is set to specify firm’s mandatory obligations in respect of establishing and maintaining a system of quality management for non-assurance services. 

Scope and application

The Accounting Professional & Ethical Standards Board (APESB) reissued APES 320 and required for firms to incorporate appropriate amendments to their systems by 1 January 2023 to establish a system of quality management.

Members in Public Practice in Australia have to follow the mandatory requirements of APES 320, whilst those practising outside of Australia have to follow the provisions of APES 320 provided they are not prevented from doing so by specific requirements of local laws and/or regulations.

The System of Quality Management

There are seven elements of a system of quality management that a firm should establish and maintain.  They are:

• Governance and Leadership
• Professional Standards
• Acceptance and continuance of client relationships and specific engagements
• Resources
• Engagement performance
• Information and communication
• Monitoring and remediation

Firms are required to document their policies and procedures that address each of those elements and communicate them to their personnel.

Allocation of responsibilities within the firm

The ultimate responsibility for the firm’s system of quality management should be assumed by the firm’s chief executive officer or the firm’s managing partner or the firm’s managing board of partners.  If they assigned any person or persons for the operational responsibility of the firm’s system of quality management, they have to have the appropriate experience, knowledge, influence and authority within the firm.  They should also have sufficient time to fulfill their assigned responsibility and understand their assigned roles and that they are accountable for fulfilling them.

Firms are required to document their policies and procedures that address each of those elements and communicate them to their personnel.

Documentation of the system of quality management

It is a requirement for a firm to maintain appropriate documentation as evidence of the operation of its system of quality management’s elements.  The form and content of the documentation is a matter of judgement and depends on the size of the firm and the nature and complexity of the firm’s practice and organisation.

Elements of the System of Quality Management

Governance and Leadership
A firm has to have policies and procedures designed to promote an internal culture recognising that quality is essential in performing engagements.

Promoting an internal cultures includes establishment of policies and procedures that address personnels; performance evaluation, compensation, and promotion (including incentive systems) to demonstrate the Firm’s overriding commitment to quality; assignment of management responsibilities so that commercial considerations do not override the quality of work performed; and provision of sufficient resources for the development, documentation and support of its quality management policies and procedures.

• Communicate its independence requirements to its personnel
• Identify and evaluate circumstances and relationship that create threats to independence and take appropriate action to eliminate those threats or reduce them to an acceptable level.

• is competent to perform the Engagement and has the capabilities, including time and resources, to do so;
• can comply with Professional Standards; and
• has considered the integrity of the client and does not have information that would lead it to conclude that the client lacks integrity. 

A firm should also have policies and procedures that require the firm to obtain information before accepting an engagement with a new client, when making decision whether to continue an existing engagement and when considering accepting a new engagement with an existing client.

If potential conflict of interest identified prior to accepting an engagement or during the conduct of the engagement, the firm should determine whether it is appropriate to accept or continue the engagement and if issues have been identified and the firm decides to accept or continue the client relationship or specific engagement, documentation of how the issues were resolved is required.

• communication of the identity and role of engagement partner to key members of client management and those charged with governance
• appropriate competence, capabilities and authority of the engagement partner to perform their role
• sufficient and appropriate involvement of the engagement partner throughout the engagement
• responsibilities of the engagement partner are clearly defined and communicated.

Engagement Performance

• timely assembly of final engagement
• maintenance of the confidentiality, safe custody, integrity, accessibility and retrievability of engagement documentation
• retention of engagement documentation for a period sufficient to meet the needs of the firm or as required by law or regulation.

Information and Communication

Monitoring and remediation