In case you couldn’t join us, we have compiled a selection of some useful take aways from the day:
1. It’s a marathon, not a sprint
Whilst all firms grappled to implement their Systems of Quality Management (SoQM) in time for the 15 December 2022 deadline, it is important to remember that this was only the beginning of the journey. ISQM 1 is designed to ensure continuous evolution and refining of the SoQM, and these improvements will happen incrementally. Don't be discouraged if everything isn't perfect initially; it's about establishing systems and processes to identify what is and isn't working well and addressing these issues one by one. Every improvement made is another step toward building a stronger SoQM in the long run.
2. It takes time and resource
Feedback from our roundtables highlighted the burden on time and resource as the biggest challenge to implementing ISQM 1. Larger firms have capacity to make this a devoted role, whereas smaller and medium firms may not have this luxury. Some suggestions to help with this are:
- Create a non-chargeable code specifically for any time spent on ISQM 1. This ensures that it doesn't interfere with other chargeable work, and it provides useful data to understand the time devoted to ISQM 1 activities in your firm.
- Consider the team involved in ISQM 1; many firms indicated nominating a single partner as responsible, but some tasks can and should be done by others in your firm.
3. It’s all about mindset
ISQM 1 will undoubtedly impact on the culture of your firm, and like any change, some staff will be more open and receptive to the change than others.
Have open conversations about the change in mindset and cultural shift that needs to take place in your firm, and bear in mind this may be different for different groups of individuals.
Lots of firms have increased their use of cold file reviews as part of the ISQM 1 monitoring processes, so for example, having conversations about how to handle constructive feedback will be a worthwhile investment for all staff.
A positive culture that values quality will contribute to the successful implementation of ISQM 1.
4. Good Root Cause Analysis (RCA)
We welcomed a devoted session on developing RCA in your firm. We looked at various methods of performing RCA, but the most important thing is that some analysis is better than none!
If you’re just getting started with RCA, then a simple method such as ‘five-why’s’ (asking why, 5 times in a row) is a good way to get ideas on a piece of paper. This will provide some good initial observations about a deficiency, but we are warned that this can lead to quite linear thinking.
The best RCA will acknowledge that deficiencies are caused by a combination of several factors, and you should explore all of these in depth to build a truly meaningful picture. Cause and effect charts are a helpful visual tool to achieve this.
Firms should consider involving all audit team members for their contributions to identify root causes – different perspectives will give you a more rounded view, and by involving more junior members in your RCA, you are embedding the culture of quality and desire to improve throughout your firm.
Lots of our attendees reflected that this was an area for ongoing development, and even some of our experienced participants said that RCA techniques can always be refined further. Our ICAEW CPD academy Root Cause Analysis Fundamentals course might be a useful session if this is a skill you want to develop further.
5. Issues in aggregate
As you commence the RCA process, you may find errors that initially seem to be isolated incidents and you may conclude them to be anomalies and not indicative of a systemic deficiency. However, over time, you may start to see the recurrence of similar themes, and this is a sign that these occurrences are more than isolated incidents. It is so important to have a systematic documentation process for any instances initially dismissed as one-offs because the cumulative effect of such instances may reveal an underlying deficiency.
Make sure your firm allocates time and resource for reviewing minor discrepancies to identify and address any emerging patterns or recurring themes. This ongoing thematic review is essential for detecting potential deficiencies that may not be immediately apparent when examining individual errors in isolation.
Wherever you are in your ISQM 1 journey, we encourage you to maintain momentum. Our ICAEW Quality Management Hub has lots of helpful resources available for your use.