SQCS No. 8 Replaces SQCS No. 7

As part of its clarity drafting conventions the ASB has issued Statement on Quality Control Standards (SQCS) No. 8, A Firm’s System of Quality Control (Redrafted). This SQCS supersedes SQCS No. 7. It was issued November 2010 and is effective as of January 1, 2012. Early application is permitted.

As with many of the redrafted standards SQCS No 8, does not change or expand SQCS No. 7 in any significant respect. Instead certain requirements that are duplicative of broader requirements in SQCS No. 7 have been moved to application and other explanatory material. This is consistent with International Standard on Quality Control No. 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements.

Documentation

You should be aware that Paragraph 46 of SQCS No. 8 contains a requirement that procedures established for dealing with differences of opinion should enable a member of the engagement team to document that member’s disagreement with the conclusions reached after appropriate consultation.

You’ll recall that this requirement was included in SAS No. 108, Planning and Supervision (AICPA, Professional Standards, vol. 1, AU sec. 311, par. .32). The ASB believes that this requirement is more appropriately placed at the firm level for all engagements.

A summary of SQCS No. 8 is available on the AICPA website, http://www.aicpa.org/InterestAreas/AccountingAndAuditing.

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