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Reflecting the transition from ISQC 1 to ISQM 1 in assurance reports under ISAE 3000 (Revised) can be tricky. ICAEW offers guidance.

In January 2022, the International Auditing and Assurance Standards Board (IAASB) published conforming and consequential amendments to the assurance standard ISAE 3000 (Revised) and other IAASB standards (ISAEs, ISREs and ISRSs), to align those standards with the new international standards on quality management (ISQM 1 and 2). These changes are effective for assurance engagements beginning on or after 15 December 2022.

One of the amendments is to the statement required in the assurance report on the application of ISQC 1. So, for assurance engagements beginning on or after 15 December 2022, the assurance report needs to include a statement that the firm of which the practitioner is a member applies ISQM 1 (or other professional requirements, or requirements in law or regulation, that are at least as demanding as ISQM 1).

This may seem clear, particularly for assurance engagements covering a reporting period beginning on or after 15 December 2022 – such as an assurance conclusion covering ‘the year ending 31 December 2023’, where ISQM 1 will be referred to, and for assurance engagements covering a reporting period beginning before 15 December 2022, where ISQC 1 would still be referred to.

What happens, however, if the practitioner is giving an assurance conclusion at a point in time, for example, when controls are effective ‘as at 31 December 2022’, and begins the engagement planning before 15 December 2022, but completes it and prepares the report after this date? Should the practitioner refer to ISQC 1 or ISQM 1?

In such cases, ICAEW considers that it would be helpful to determine when the practitioner has ‘substantively started’ the work as a basis for determining which standard to refer to in the assurance report. A reasonable interpretation of ‘substantively started’, ICAEW believes, would be when the engagement planning procedures are performed (as opposed to the issuance of the engagement letter, which may occur potentially much earlier).

So, continuing with the above scenario, if the work on the engagement to give an assurance conclusion that controls are effective at 31 December 2022 has been substantively started before 15 December 2022, then it is likely that the assurance report would refer to ISQC 1. If the work has not been substantively started before 15 December 2022, then the report would likely refer to ISQM 1. Similar considerations would apply in the performance of an agreed-upon procedures (ISRS 4400 (Revised)) engagement.

These conforming and consequential amendments do not impact the ISQM 1 requirement on firms to have designed and implemented a system of quality management by 15 December 2022.


To assist firms with the transition to the new quality management standards (ISQM 1 and 2 and ISA 220 (Revised)) and their implementation, the faculty has developed and collated articles, guidance, webinars and other resources.

Our ‘Quality management in audit firms’ hub 

The ICAEW Insights hub on ‘Quality management

The IAASB hub page for resources to support the implementation of the new and revised international standards on quality management.

About the author
Louise Sharp, Senior Technical Manager, Audit & Assurance

Audit & Beyond

This article was first featured in the December 2022/January 2023 edition of Audit & Beyond.

Audit & Beyond Dec/Jan 2022/23