Elements of a system of quality management - part 1

In this lesson

1. 0:00 Eight components of quality management systems
2. 1:00 Firm's risk assessment process explained
3. 2:12 Governance and leadership from the top down
4. 5:33 Ethical requirements and independence standards
5. 6:55 Scalability for large and complex firms
6. 8:05 Acceptance and continuance of client relationships

About this lesson

You'll explore how firms establish quality objectives, identify and assess risks on an ongoing basis, and develop appropriate responses tailored to their specific circumstances. This is essential knowledge for the Audit and Assurance module, particularly when understanding how audit firms are regulated and how quality is embedded across all engagements. The first part focuses on the firm's risk assessment process and governance structure. You'll see how quality management begins with clear objectives set from the top down, with the managing partner holding accountability for the entire system. The lesson emphasises that quality objectives must drive decision-making above profit or client retention—meaning auditors can challenge client judgements without fear of losing business. You'll learn how firms identify emerging risks, assess their likelihood and significance, and implement responses, recognising that this is a continuous cycle rather than a one-off exercise. You'll also discover how ethical requirements and independence checks operate within the quality system, and why they must be scaled appropriately to firm size. For large multi-office firms, robust monitoring procedures are needed to capture potential conflicts of interest across different offices and jurisdictions. The lesson concludes by introducing acceptance and continuance procedures, showing how firms must continually reassess existing client relationships to ensure they still align with the firm's ethical standards and quality requirements, not just profitability.

Duration: 10m