Accounting practices need to manage engagement quality to maintain a consistently high-level of client service, support teams and minimise risk. In Australia and New Zealand, mandatory standards require all practices - whatever their size - to establish a customised system of quality management (SOQM), with different standards applying to assurance and non-assurance practices. An SOQM may also be required by other regulations, including for Australian tax agents under the Tax Agent Services Act 2009 (TASA).

Practices had long adhered to quality control standards by implementing policies and procedures to manage the quality of their engagements. However, with the introduction of the quality management standards in 2022, practices needed to adapt their systems to comply with these new and updated standards.

Here you can find an overview of the quality management standards, and access tools and resources to assist you to design, implement, monitor and update your SOQM.

Which quality management standards apply to my practice?

This depends on the services your practice performs:

• Assurance practices: If your practice performs any audit or assurance engagements your SOQM for assurance engagements must be risk-based and aligned with audit quality management standards: ASQM 1 and ASQM 2 in Australia and PES 3 and PES 4 in New Zealand. These standards require practices to identify and assess quality risks, then design and implement policies and procedures to effectively respond to these risks. Although the introduction of these standards required practices to implement a new approach to quality management, many found their existing policies and procedures could form part of their new SOQM as effective responses to quality risks.
• Non-assurance practices: If your practice performs only non-assurance services, your SOQM should reflect APES 320 in Australia and PS-1 in New Zealand, both updated in 2022. Despite the change in terminology from quality control to quality management, the updated standards retain a significant proportion of requirements from the pre-2022 versions.
• Assurance and other services: If your practice performs both assurance and non-assurance engagements, your SOQM for all assurance engagements must be consistent with the audit quality management standards. You can extend this system to your entire practice or implement a separate SOQM to manage non-assurance engagements.
• Australian tax or BAS agent: You must adapt your SOQM to provide reasonable confidence that you are complying with the Tax Practitioner’s Board Code and other TASA obligations, applicable when the Tax Agent Services (Code of Professional Conduct) Determination 2024 (the Determination) applies to your practice.
• Your practice may have other quality management obligations, depending on the services performed.

Regardless of which standards apply to your practice, this isn’t a set and forget activity. The quality management standards emphasise the importance of ongoing monitoring and remediation of your quality system.