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The One Reason Why You Will Fail a Quality Assurance Peer review1

...and what you can do to prevent it

Attention all Public Accountants ...

1. Also called a quality control audit

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Failure to implement a comprehensive quality assurance system, that

complies with APES 320

 You don’t want this to happen to your firm:

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What would / could happen if your professional body failed you on quality control?

Potentially -

• The firm could lose it's professional membership;

• There will be costs, fines, involved in trying to fight it;

• Lost prestige from not having that professional connection;

• Lost credibility amongst current and prospective clients;

• Possibly, losing clients (and hence income) as a final

outcome;

• Loss of reputation amongst wider business community.

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So, what can youdo about it?

(assuming you already don't have a compliant quality control system in place)

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Before that gets answered, it's important to understand the

reason(s) behind quality assurance in accounting firms, and what's involved (or required) in such a

system.

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Why Do We Have Quality Why Do We Have Quality Control?Control?

Essentially, its concerned with ensuring the work done by practitioners (and their employees) complies with professional standards and regulatory requirements.

It’s not concerned with the appropriateness (or otherwise) of opinions or advice provided to your clients.

It’s the over-arching system of getting the client work done.

Ultimately, the aim is to lower business risk (hence enjoy better insurance outcomes), and raise the opinion that government and other regulators have of the profession.

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What does Quality Control Involve? (1)

• Quality control in accounting firms is regulated by the standard APES 320 – Quality Control for Firms.

• In certain instances this has legislative backing.

• This standard describes the 6 main areas of activity in the firm that need to be covered.

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What does Quality Control Involve? (2)

1. Leadership responsibilities for quality.

2. Adherence to the relevant ethical requirements.

3. Accepting and continuing client relationships and specific engagements.

4. Aspects of the team and human resource issues.

5. Performing the (various) client engagements, in accordance with professional requirements.

6. Monitoring and improving the firms systems, etc, handling system failures and exceptions.

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What to about Quality Control?

There are 4 possible options, each with pro’s and con’s.

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Option 1:Do nothing.

For:• Won’t waste any

time.

Against:• Initial fail of quality

review.• Will be required to

complete one anyway.

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Option 2:Take the document provided by the

professional body and adopt it as your own.

For:• Won’t waste any

time, quick and easy.

• This document is already designed to

be compliant.

Against:• Likely will fail quality

review: why? As it is seen as someone else’s and you are

taken not to know/understand the

requirements of quality control.

• Will be required to complete one anyway.

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Option 3: Take the document provided by the

professional body and fully adapt it to your

practice.For:

• Will likely get through quality review first

time.

Against:• This will consume a

huge amount of professional time:

– In understanding the requirements of the standard;

– And how these relate to the document, and what needs to be customised.

• Expect to take 6-8 weeks.

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Option 4:Completely Outsource Option 3.

For:• Will get through quality review first

time (see guarantee).

Against:• Needs a few hours

of your time to answer critical

questions.

(but this is really a plus compared to option 3).

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How can you easily side-step a follow-up quality

review?

Even if you’re a few years away from your next review …

Easy. Initiate a quality control process now, including a customised manual.

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Reviewers not only want to see that you have a document in place

They also want to see that you understand the concept of quality control.

Most importantly, they want to see that you are using it - and will look for evidence of

this.

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Insignia Consulting supplies Quality Control Manuals fully customised to your

practice.

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Contact Michael at Insignia Consultingif you would like more information about

investing in a custom quality control manual.

quality@insigniaconsulting.com.au

www.qualitycontrol.insigniaconsulting.com.au