Philippine Standards On Quality Control (PSQC) (PSQC1, PSA 220)

Philippine Standards
on Quality Control
(PSQC)
[PSQC1, PSA 220]
1
PSQC 1 vs PSA 220
1) PSQC 1 – “QUALITY CONTROL FOR FIRMS THAT

PERFORM AUDITS AND REVIEWS OF HISTORICAL
FINANCIAL INFORMATION,AND OTHER ASSURANCE
AND RELATED SERVICES ENGAGEMENTS”
 Whether assurance or non-assurance engagement,
PSQC will be reference for quality control; firm level
 General standard pertaining to quality control of all
firms
2) PSA 220 – “Quality Control for an Audit of Financial
Statements”
 Related standard of PSQC 1 because it pertains to
specific assurance engagement (audit); engagement
team level
2
 Specific standard pertaining only to audit
Introduction
1) In the Philippines, who is responsible for the

establishment and promulgation of standards of quality
control firms should follow in all of their engagements?
2) It is the Auditing and Assurance Services Council
(AASC) created by the Professional Regulation
Commission (PRC) upon the recommendation of
Board of Accountancy (BOA).
3
Important Terms
1) Firm – Sole practitioner or partnership of professional

accountants.
2) System of Quality Control – refers to quality control
policies and procedures adopted by CPA forms that are
designed to provide reasonable assurance that
 the firm and its personnel comply with professional
standards and regulatory and legal requirements, (Code
of Ethics/GAAS) and
 that reports issued by the firm or engagement partners
are appropriate in the circumstances. (Firm Level > PSQC
1; engagement partners > PSA 220)
4
Important Terms
1) Quality Control Policies – objectives and goals to be

achieved
2) Quality Control Procedures – are steps/procedures to
be taken to accomplish the policies adapted or
implement and monitor compliance with those policies
5
What is the purpose of PSQC?
(a) Establish basic principles and essential procedures

and to provide guidance regarding a firm’s
responsibilities for its system of quality control for
audits and reviews of historical financial
information, and for other assurance and related
services engagements.
(b) This PSQC is to be read in conjunction with Parts A
and B of the Code of Ethics for Professional
Accountants in the Philippines (the Philippine
Code).
6
Objectives under PSQC1
(a) The OBJECTIVE of the firm should establish a system

of quality control designed to provide it with
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.
7
Objectives under PSA 220
(a) The OBJECTIVE of the auditor is to implement quality

control procedures at the engagement level that
provide the auditor with reasonable assurance that:
 The audit complies with professional standards and
regulatory and legal requirements, and
 The auditor’s report issued is appropriate in the
circumstances.
8
What is a system of quality
control?
(a) It consists of policies designed to achieve the

objectives and the procedures necessary to implement
and monitor compliance with those policies.
(b) The PSQC applies to all firms, whether a sole
practitioner or partnership or other entity of
professional accountants.
(c) The nature of the policies and procedures developed
by individual firms to comply with this PSQC will
depend on various factors such as the size and
operating characteristics of the firm, and whether it
is part of a network.
9
What are the elements of a system
of quality control? PSQC 1
The elements of a system of quality control are:

a. Leadership responsibilities for quality within the firm.
b. Ethical requirements.
c. Acceptance and continuance of client relationships and
specific engagements.
d. Human resources.
e. Engagement performance.
f. Monitoring.
10
What are the elements of a system
of quality control? PSA 220
The elements of a system of quality control are:

a. Leadership responsibilities for quality on audits.
b. Relevant Ethical requirements.
c. Acceptance and continuance of client relationships and
audit engagements.
d. Assignment of engagement teams
e. Engagement performance.
f. Monitoring.
11
1. Leadership Responsibility
(foundation of all elements)
➢ PSQC 1 – (culture inside the firm) CEO or if

appropriate, the managing boards of partner should
assume the responsibility of the firm’s system of
quality control
➢ PSA 220 – (auditing firm) Engagement partner is
responsible for the overall quality on each audit
engagement to which that partner is assigned.
12
2. Relevant Ethical Requirements
➢ PSQC 1 – requirement of ethical standards for all CPAs

in the PH - Code of Ethics (Professional Competence
and Due Care, Integrity, Objectivity, Confidentiality,
Professional behavior, Independence)
➢ PSA 220 – engagement partner should oversee all the
members in case of non-compliance with relevant
ethical requirements.
13
3. Acceptance and continuance of
client relationships and specific
engagements.
➢ PSQC 1 – The firm is competent to perform the
engagement and has the capabilities including time and
resources to do so
➢ Considered the integrity of the client
➢ PSA 220 – Whether the engagement team is competent
to perform the audit engagement and has the necessary
capabilities including time and resources
➢ Considered the integrity of the principal owners, key
management and those charged with governance of the
entity
14
4. Human Resources (PSQC1)
Engagement or Audit Team (PSA 220)
➢ PSQC 1 – Human Resources – personnel issues relevant

to firm’s policies and procedures (recruitment, perf
evaluation, capabilities, competence, career
development, promotion, compensation, personnel
needs)
➢ PSA 220 – Assignment of Engagement Team – the
engagement partner has to assure that the engagement
teams collectively have the appropriate competence
and capabilities to:
 Perform audit engagement in accordance with
professional standards and applicable regulatory and
legal requirements, and
 Enable the auditor to issue a report issued is
appropriate in the circumstances.
15
5. Engagement Performance
(execution of the audit)
➢ PSQC 1 – The firm promotes consistency in the quality
of engagement performance through its policies and
procedures. This is often accomplished through
written or electronic manuals, software tools or
other forms of standardized documentation, and
industry or subject matter-specific guidance
materials.
➢ PSA 220 – The engagement partner should take
responsibility for the direction, supervision and
performance of the audit engagement in compliance
with professional standards and regulatory and legal
requirements, and for the auditor’s report that is issued
to be appropriate in the circumstances.
16
6. MONITORING
➢ PSQC 1 – PSQC 1 requires the firm to establish policies

and procedures designed to provide it with reasonable
assurance that the policies and procedures relating to the
system of quality control are relevant, adequate,
operating effectively and complied with in practice
➢ PSA 220 – The engagement partner considers the results
of the monitoring process as evidenced in the latest
information circulated by the firm and, if applicable,
other network firms. The engagement partner considers:
(a) Whether deficiencies noted in that information may
affect the audit engagement; and
(b) Whether the measures the firm took to rectify the
situation are sufficient in the context of that audit.
17

Philippine Standards On Quality Control (PSQC) (PSQC1, PSA 220)

Uploaded by

Copyright:

Available Formats

Philippine Standards On Quality Control (PSQC) (PSQC1, PSA 220)

Uploaded by

Document Information

Original Description:

Original Title

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

Philippine Standards On Quality Control (PSQC) (PSQC1, PSA 220)

Uploaded by

Copyright:

Available Formats

Philippine Standards

1) PSQC 1 – “QUALITY CONTROL FOR FIRMS THAT

1) In the Philippines, who is responsible for the

1) Firm – Sole practitioner or partnership of professional

1) Quality Control Policies – objectives and goals to be

(a) Establish basic principles and essential procedures

(a) The OBJECTIVE of the firm should establish a system

(a) The OBJECTIVE of the auditor is to implement quality

(a) It consists of policies designed to achieve the

The elements of a system of quality control are:

The elements of a system of quality control are:

➢ PSQC 1 – (culture inside the firm) CEO or if

➢ PSQC 1 – requirement of ethical standards for all CPAs

➢ PSQC 1 – Human Resources – personnel issues relevant

➢ PSQC 1 – PSQC 1 requires the firm to establish policies

You might also like