Unit II Professioinal Standards

THE PROFESSIONAL
STANDARDS
ACCO 30043Auditing and Assurance Principles
OVERVIEW
When auditing financial statements, an auditor
assumes certain professional responsibilities. Auditor’s
opinion must be based on an examination conducted in
accordance with professional standards. Failure to
comply with these standards exposes the auditor to risks
such as loss of public respect or even assessment of
legal damages.
Standards are established to measure the quality of

performance of individuals and organizations. Standards
relating to the accounting profession concern themselves
with CPAs' professional qualities, the judgment exercised
by the CPAs in the performance of their professional
engagement, and the CPA firm's quality control policies
and procedures.
LEARNING OUTCOMES:
1. Identify the need for a firm Professional
Standard
2. Familiarization with the complete set of
PSAs.
3. Identify the need for Quality Control
4. Define and understand Quality Review
Committee and it’s responsibilities
Philippine Standards on Auditing (PSAs)
The Philippine Standards on Auditing (PSA) deals with the
auditor's responsibility to form an opinion on the financial
statements. It establishes the independent auditor's overall
responsibilities when conducting an audit of financial
statements.
• The PSAs are interpretations of GAAS, meaning, they are intended to clarify the
meaning of "generally accepted auditing standards.“
• The PSAs contains basic audit principles and essential procedures together with
related guidance in the form of explanatory and other material which the auditor
should follow when conducting financial statements audit.
• Application of PSAs: PSAs apply to independent examination of (historical)
financial statements of any entity conducted for the purpose of expressing an
opinion.
• Compliance with PSA: The auditor should conduct an audit in accordance with
PSA. Compliance with PSAs means application of basic audit principles and
performance of essential audit procedures. Compliance with relevant PSAs is
mandatory. Only in exceptional instances where departure from relevant PSA is
allowed such as when the auditor believes that the:
 Amount involved is insignificant; or
 Requirement of the PSA is impractical to perform; or
 Requirement of the PSA is impossible to perform.
Full text can be accessed in the link below:

https://aasc.org.ph/downloads/PSA/PSA.php
NATURE OF SYSTEM OF QUALITY CONTROL
A system of quality control refers to quality control policies
and procedures adopted by CPA firms that are designed to
provide reasonable assurance that the firm and its personnel
comply with professional standards and regulatory and legal
requirements and that reports issued by the firm or
engagement partners are appropriate in the circumstances.
System of Quality Control in an Audit

Engagement: Policies and procedures to
provide reasonable assurance that all
audits are conducted in accordance with
PSAs and that audit reports issued are
appropriate in the circumstances
QC Policies vs. QC Procedures:
QC Policies QC Procedures
Are the objectives and goals to be Are steps/procedures to be taken
achieved to:
• accomplish the policies
adopted, or
• implement and monitor
compliance with those policies
Philippine Standard on Quality Control 1 (PSQC1)
Quality Control For Firms That Perform Audits And Reviews Of
Financial Statements, And Other Assurance And Related
Services Engagements
The objective of the firm is to establish and maintain a system of quality control to
provide it with reasonable assurance that:
a) The firm and its personnel comply with professional standards and regulatory
and legal requirements; and
b) Reports issued by the firm or engagement partners are appropriate in the
circumstances.
Refer to
https://aasc.org.ph/downloads/PSQC/p
ublications/PDFs/PSQC-Redrafted.pdf
for the full text
Nature and Extent of a System of
Quality Control
The nature and extent of the SQC developed by CPA firms vary
from firm to firm due to various factors such as:
a. Size of the CPA firm

b. Nature of its practice
c. Operating characteristics
d. Its organization
e. Geographical dispersion
f. Cost-benefit consideration
g. Whether it is part of a network
Elements of System of Quality
Control
Although the nature and extent of the system of quality
control developed by CPA firms vary from one firm to
another, a system of quality control must have the
following elements:
a. Leadership responsibilities for quality

within the firm.
b. Relevant ethical requirements.
c. Acceptance and continuance of client
relationships and specific engagements.
d. Human resources.
e. Engagement performance.
f. Monitoring.
QUALITY REVIEW COMMITTEE
• To ensure that CPAs work to the highest standards, the government thru the
Professional Regulatory Board of Accountancy (BOA) has required all CPA firms
and individual CPAs in public practice to obtain a certificate of accreditation to
practice public accountancy. Such certificate is valid for three (3) years and can be
renewed after complying with the requirements of the BOA.
• As a condition to the renewal of the certificate of accreditation to practice public
accountancy, the BOA requires individual CPAs and CPA firms to undergo a quality
control review to ensure that these CPAs comply with accounting and auditing
standards and practices.
• The BOA has created a Quality Review Committee (QRC) which shall conduct a
quality review on applicants for registration to practice public accountancy.
Functions of the Quality Review Committee
• Conducts quality review on applicants for registration, or renewal thereof, to
practice public accountancy
• Render a report on such quality review, which shall be attached to the application
for registration
• Recommend to BOA revocation of registration and professional ID cards of CPAs
for not observing the SQC requirements
Quality review – an oversight into (or study or appraisal of) the quality of audit of FS
through a review of quality control measures established by CPA firms and individual
CPAs in public practice to ensure compliance with accounting and auditing standards
and practices
THANK YOU
Audit and Assurance Principles

Unit II Professioinal Standards

Uploaded by

Copyright:

Available Formats

Unit II Professioinal Standards

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Unit II Professioinal Standards

Uploaded by

Copyright:

Available Formats

THE PROFESSIONAL

Standards are established to measure the quality of

Full text can be accessed in the link below:

System of Quality Control in an Audit

a. Size of the CPA firm

a. Leadership responsibilities for quality

You might also like