Scope of this Auditing Standard
This Australian Standard on Auditing (ASA) deals with the specific responsibilities of the auditor regarding quality management at the engagement level for an audit of a financial report and other historical financial information, and the related responsibilities of the engagement partner. This ASA is to be read in conjunction with relevant ethical requirements. (Ref: Para. A1, A38)
This ASA does not address the responsibilities for the auditor that may exist in legislation, regulation or otherwise in connection with, for example, the independence or other assurance related requirements of the Corporations Act 2001.
The Firm’s System of Quality Management and Role of Engagement Teams
Under ASQM 1, the objective of the firm is to design, implement and operate a system of quality management for audits or reviews of financial reports and other financial information, or other assurance or related services engagements performed by the firm, that provides the firm with reasonable assurance that: (Ref: Para. A13–A14)
- The firm and its personnel fulfill their responsibilities in accordance with Australian Auditing Standards and applicable legal and regulatory requirements, and conduct engagements in accordance with such standards and requirements; and
- Engagement reports issued by the firm or engagement partners are appropriate in the circumstances.
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 ASA, for: (Ref: Para. A4–A11)
- 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;
- 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
- 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 public interest is served by the consistent performance of quality audit engagements through achieving the objective of this standard and other ASAs for each engagement. A quality audit engagement is achieved through planning and performing the engagement and reporting on it in accordance with Australian Auditing Standards and applicable legal and regulatory requirements. Achieving the objectives of those standards and complying with the requirements of applicable law or regulation involves exercising professional judgement and exercising professional scepticism.
In accordance with ASA 200, the engagement team is required to plan and perform an audit with professional scepticism and to exercise professional judgement. Professional judgement is exercised in making informed decisions about the courses of action that are appropriate to manage and achieve quality given the nature and circumstances of the audit engagement. Professional scepticism supports the quality of judgements made by the engagement team and, through these judgements, supports the overall effectiveness of the engagement team in achieving quality at the engagement level. The appropriate exercise of professional scepticism may be demonstrated through the actions and communications of the engagement team. Such actions and communications may include specific steps to mitigate impediments that may impair the appropriate exercise of professional scepticism, such as unconscious bias or resource constraints. (Ref: Para. A33–A36)
The requirements of this ASA are intended to be applied in the context of the nature and circumstances of each audit. For example:
- When an audit is carried out entirely by the engagement partner, which may be the case for an audit of a less complex entity, some requirements in this ASA are not relevant because they are conditional on the involvement of other members of the engagement team. (Ref: Para. A13–A14)
- When an audit is not carried out entirely by the engagement partner or in an audit of an entity whose nature and circumstances are more complex, the engagement partner may assign the design or performance of some procedures, tasks or actions to other members of the engagement team.
The Engagement Partner’s Responsibilities
The engagement partner remains ultimately responsible, and therefore accountable, for compliance with the requirements of this ASA. The term “the engagement partner shall take responsibility for…” is used for those requirements that the engagement partner is permitted to assign the design or performance of procedures, tasks or actions to appropriately skilled or suitably experienced members of the engagement team. For other requirements, this ASA expressly intends that the requirement or responsibility be fulfilled by the engagement partner and the engagement partner may obtain information from the firm or other members of the engagement team. (Ref: Para. A22–A25)
See ASQM 1, paragraph 14.
See ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards, paragraphs 15‒16 and A20‒A24.