1(a)(i) Describe eight concerns evident from document A; and (a)(ii) For each concern raised, provide an appropriate policy recommendation in terms of International Standard of Quality Control 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements.
Answer
The provided solution for Question 1, Part (a), outlines concerns about GMA's quality control systems and suggests policy recommendations based on ISQC 1. The key issues identified from Document A fall into several categories:
Leadership: An unqualified office manager was tasked with quality control, and the partner failed to provide adequate oversight.
Ethics: A trainee accountant was given the ethics leader role, a position they lack the seniority and experience for. The firm also lacks formal disciplinary procedures for ethical breaches.
Client Acceptance: The previous partner prioritized fees over proper client acceptance and continuance procedures, ignoring potential risks and competence limitations.
Human Resources: The firm has high staff turnover, inadequate staff training, and an illogical system for assigning staff to engagements. Performance appraisals were infrequent and tied to client sales rather than quality.
Engagement Performance & Monitoring: The firm lacked policies for engagement performance and a proper monitoring process to ensure compliance with quality standards.
The solution provides a detailed table with 18 potential concerns and corresponding policy recommendations, such as appointing a qualified quality control officer, formalizing staff training, implementing clear client acceptance procedures, and establishing a robust monitoring process. The question requires eight concerns, and the provided solution offers a comprehensive list of all possible answers.
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