QC 1000 establishes an integrated, risk-based quality control standard requiring all registered public accounting firms to identify specific risks to their practice and create a quality control system with appropriate responses to guard against those risks. The Securities and Exchange Commission (SEC) approved the new quality control standard on Sept. 9.
The practice aid aims to provide a high-level overview of certain features specific to QC 1000, such as highlighting incremental requirements that QC 1000 imposes on companies that issued audit reports for over 100 issuers in the previous calendar year.
The comparison document was prepared by the Office of the Chief Auditor staff as a reference tool for QC 1000. The table in the document maps the text of QC 1000 against the requirements of the International Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, adopted by the International Auditing and Assurance Standards Board and the Statement on Quality Management Standards No. 1, A Firm's System of Quality Management, adopted by the AICPA, which address similar matters.
This webinar, led by expert staff in the PCAOB’s Office of the Chief Auditor, offers an overview of QC 1000 requirements and was created to help auditors prepare for the standard’s implementation.
According to the SEC, the new quality control standard focuses on an audit firm’s accountability and continuous improvement of its audit practice. It will require an annual evaluation of its QC system and related reporting to the PCAOB, certified by key firm personnel. In addition, firms that annually issue audit reports for over 100 issuers will be required to establish an external quality control function comprising one or more persons who can exercise independent judgment related to the firm’s QC system.
The CPA Advisor reported that in 2023, only 14 audit firms out of a total of over 1,600 registered with the PCAOB met the 100-issuer-or-more threshold. Firms must annually evaluate their quality control system and report the results to the PCAOB on new Form QC. The form will be certified by key firm personnel to reinforce individual accountability.