TWSA220 Quality Management for an Audit of Financial Statements 　　　　

Status

Issued by Auditing and Assurance Standards Committee in Taiwan on 2 April, 2024

Summary

This Standard deals with the specific responsibilities of the auditor regarding quality management at the engagement level for an audit of financial statements, and the related responsibilities of the engagement partner.

The engagement team, led by the engagement partner, is responsible, within the context of the firm’s system of quality management and through complying with the requirements of this Standard, for:

(a) Implementing the firm’s responses to quality risks (i.e., the firm’s policies or procedures) that are applicable to the audit engagement using information communicated by, or obtained from, the firm;

(b) Given the nature and circumstances of the audit engagement, determining whether to design and implement responses at the engagement level beyond those in the firm’s policies or procedures; and

(c) Communicating to the firm information from the audit engagement that is required to be communicated by the firm’s policies or procedures to support the design, implementation and operation of the firm’s system of quality management.

The engagement partner remains ultimately responsible, and therefore accountable, for compliance with the requirements of this Standard.

The objective of the auditor is to manage quality at the engagement level to obtain reasonable assurance that quality has been achieved such that:

(a)  The auditor has fulfilled the auditor’s responsibilities, and has conducted the audit, in accordance with professional standards and applicable legal and regulatory requirements; and

(b) The auditor’s report issued is appropriate in the circumstances.

The engagement partner shall:

(a) Take overall responsibility for managing and achieving quality on the audit engagement, including taking responsibility for creating an environment for the engagement that emphasizes the firm’s culture and expected behavior of engagement team members.

(b) Have an understanding of the relevant ethical requirements, including those related to independence, that are applicable given the nature and circumstances of the audit engagement.

(c) Determine that the firm’s policies or procedures for the acceptance and continuance of client relationships and audit engagements have been followed, and that conclusions reached in this regard are appropriate.

(d) Determine that sufficient and appropriate resources to perform the engagement are assigned or made available to the engagement team in a timely manner.

(e) Determine that members of the engagement team, and any auditor’s external experts and internal auditors who provide direct assistance who are not part of the engagement team, collectively have the appropriate competence and capabilities, including sufficient time, to perform the audit engagement.

(f) Take responsibility for the direction and supervision of the members of the engagement team and the review of their work.

(g) Take responsibility for the engagement team undertaking consultation on: (i) difficult or contentious matters and matters on which the firm’s policies or procedures require consultation; and (ii) other matters that, in the engagement partner’s professional judgment, require consultation. The engagement partner shall also determine that members of the engagement team have undertaken appropriate consultation during the audit engagement.

For audit engagements for which an engagement quality review is required, the engagement partner shall:

(a) Determine that an engagement quality reviewer has been appointed;

(b) Cooperate with the engagement quality reviewer and inform other members of the engagement team of their responsibility to do so;

(c) Discuss significant matters and significant judgments arising during the audit engagement, including those identified during the engagement quality review, with the engagement quality reviewer; and

(d) Not date the auditor’s report until the completion of the engagement quality review.

Regarding monitoring and remediation, the engagement partner shall take responsibility for:

(a) Obtaining an understanding of the information from the firm’s monitoring and remediation process, as communicated by the firm including, as applicable, the information from the monitoring and remediation process of the network and across the network firms;

(b) Determining the relevance and effect on the audit engagement of the information referred to in (a) above and take appropriate action; and

(c) Remaining alert throughout the audit engagement for information that may be relevant to the firm’s monitoring and remediation process and communicate such information to those responsible for the process.

Prior to dating the auditor’s report, the engagement partner shall determine that the engagement partner has taken overall responsibility for managing and achieving quality on the audit engagement. In doing so, the engagement partner shall determine that:

(a) The engagement partner’s involvement has been sufficient and appropriate throughout the audit engagement such that the engagement partner has the basis for determining that the significant judgments made and the conclusions reached are appropriate given the nature and circumstances of the engagement; and

(b) The nature and circumstances of the audit engagement, any changes thereto, and the firm’s related policies or procedures have been taken into account in complying with the requirements of this Standard. 

Effective date

This Standard is effective for audits of financial statement for periods ending on or after December 31, 2024.