Summit26 Pre-Conference - Quality Management: Now What?-QM - Now What

QM - Now What - Case Studies

Pdf Summary

The document presents five case studies on applying Quality Management (QM) standards in CPA firms.

<strong>Case 1</strong> focuses on engagement quality review (EQR) policies. Yellowstone CPAs has grown, expanded into new services, and may soon add larger, more complex government audit clients. Its current EQR triggers are narrow: only legally required EQRs, new service lines, and clients over $100M revenue. The case asks firms to refine EQR criteria based on risk, discuss their own EQR triggers, and consider where to find qualified external reviewers if needed.

<strong>Case 2</strong> examines whether firms truly “live out” their QM policies. It presents two quality risks:  
1) weak acceptance/continuance decisions due to poor assessment of engagement complexity and staffing/resources;  
2) inadequate direction, supervision, and review causing incomplete or unclear workpapers and off-target procedures.  
Firms are asked to identify policies, procedures, and evidence that they are consistently followed.

<strong>Case 3</strong> is a monitoring playbook. Firms should select key risk responses from each QM component and brainstorm how to test them and whether some monitoring should occur more frequently.

<strong>Case 4</strong> addresses deficiency identification and root cause analysis using Yellowstone CPAs’ monitoring results. Findings include delayed issuance, compressed timelines, budget overruns, missing AUP training, a review engagement with undocumented materiality, and errors in major program determination on Single Audits. The case asks whether these represent deficiencies, what the root causes are, how to remediate them, and how to handle a nonconforming SSARS review engagement.

<strong>Case 5</strong> revisits risk assessment as firms change. Two scenarios highlight changes in staffing and outsourcing needs, and merger-driven growth, new service lines, multiple offices, and documentation inconsistency. Firms are asked what QM components need reevaluation and what new risks may exist.

Overall, the document is a practical discussion guide for assessing, monitoring, and updating QM systems as firms grow and evolve.

Keywords

quality management

CPA firms

engagement quality review

monitoring

risk assessment

root cause analysis

deficiency identification

acceptance and continuance

supervision and review

audit standards