Hello there!
What if your firm’s System of Quality Management (SoQM) worked like an airplane?
No, this isn’t a metaphor for school kids.
This edition is the start of a practical framework for CPA / CA firm leaders who want their firms to fly high with assurance quality and risk management.
The aviation lens helps us grasp the interdependence, precision, and systems thinking required to comply with global Quality Management (QM) Standards — ISQM 1, CSQM 1 (Canada), the upcoming AICPA SQMS 1, and PCAOB QC 1000.
Let’s break down each SoQM component with this analogy to unpack:
What the standards actually expect,
Where most firms fall short, and
What your firm can do to succeed.
Expert Insights
Here’s the 2-minute read or expert insights for this issue:
Risk Assessment Process (RAP)
Airplane: Checking weather forecasts, runway conditions, air traffic.
Your Firm: Proactively identify and assess quality risks before takeoff.
QM Standards are forward-looking. Yet most firms remain reactive — identifying risks after inspections. Per SQMS 1:
“The firm should establish quality objectives... and identify and assess quality risks...”
Your Action: Where could quality break down? Anticipate failure points before they occur.
Acceptance & Continuance of Clients and Engagements (A&C):
Aviation: Only board passengers and cargo that meet safety criteria.
Your Firm: Not every client is the right fit — ethically, technically, or reputationally.
This is your gatekeeping function. It shapes your firm’s risk profile. Your Action: Choose clients that drive value and reduce exposure right from the start.
Relevant Ethical Requirements (RER):
Aviation: Pilots don’t fly drunk. No bending rules for family discounts.
Your Firm: Ethics must be a lived system - not wallpaper or a checklist.
Per ISQM 1:
“The firm and its personnel fulfill their responsibilities in relation to the relevant ethical requirements...”
Your Action: Does your firm have:
A whistleblower process?
A risk management manual?
Psychological safety to raise issues although it may be internal?
Governance and Leadership (G&L):
Aviation: The captain sets the tone. Crew follows.
Your Firm: Tone at the top is not a cool-to-use slogan in discussions alone. It must be observable.
This is where I see many CPA firm employees struggle, because, leadership action does not sync with what's said.
Partners must lead by example in reviews, discussions, and decisions.
Your Action: Culture is not "what we say". It's "how we do things at the firm" - led by Partners!
Human, Intellectual and Technological Resources (HIT):
Aviation: Flight manuals, avionics, radar, engines and the crew.
Your Firm: Each resource type has a critical role in your SoQM:
Intellectual: Audit methodology, templates, and technical guidance.
Technological: Engagement tools, cloud systems, automated QC review tools.
Human: Partners, managers, specialists, reviewers.
The firm shall obtain, develop and use resources that are appropriate for the design, implementation and operation of a solid system of quality management.
Your Action: Firms often underinvest in resources and over-rely on an already overburdened staff. Worse, many use outdated methodologies and tools - focus on reversing these at your firm.
Learning, Education and Development (LED):
Aviation: Pilots undergo regular simulator training, not just yearly CPE.
Your Firm: Although L&D is a part of Human Resources above, such is its importance that I choose to view it as a separate component. You cannot achieve quality if your people are not continuously learning.
Assurance is a hard course to learn theoretically - because it's meant to be learned 90% on the field. Agree?
Your Action: Focus on scenario-based training, post-engagement reviews, and technical debriefs.
Engagement Performance (EP):
Aviation: Safe takeoff, smooth flight, and safe landing - every single time.
Your Firm: The audit file must reflect robust planning, application of professional skepticism, evidence-based judgments, and solid documentation that tells the story clearly. Consultations on complex, unusual, or unfamiliar accounting and auditing matters are undertaken with qualified individuals and documented well.
If engagement teams treat quality checks like annoying roadblocks, your culture is off.
Your Action: You're the engagement pilot - push for better quality, always!
Information and Communication (I&C):
Aviation: The control tower, cabin crew, and passengers are all kept in sync.
Your Firm: Information must flow inwards and outwards, across all levels in the firm, and at the right timing.
Email is not a communication system. Neither is MS Teams sufficient to show you run an effective SoQM.
Your Action: A structured, documented process for firm-wide and engagement-level communication is needed. For e.g., think about who identifies technical updates, how the capture it, how it's communicated and who approves before these alerts go out.
Monitoring and Remediation (M&R):
Aviation: Mid-flight diagnostics and real-time alerts to avoid catastrophic failure.
Your Firm: Ongoing monitoring is essential - not just annual cold file inspections.
And that's why QC 1000 says:
"In addition to monitoring completed engagements,... ...If the firm issued audit reports with respect to more than 100 issuers.. ...should monitor in-process engagements."
Your Action: Deploy both proactive and retrospective mechanisms, and embrace continuous monitoring or perhaps, use a tool like Auqulor that can support all types of reviews.
Frequently Asked Questions
Here’s the FAQ for this issue:
What if we already got a clean inspection result - do we still need to do this?
That’s great. But, inspections are a snap-shot and backward looking. The SoQM is forward looking (and real-time). It’s like building a forward-looking engine that can sustain, scale and elevate the firm and overall quality: every day, every file, every team.
While the SoQM is structured with eight core components, these are just the foundation. CPA firms can break them down further into specific sub-components (high recommended), if needed. This is crucial for tailoring the SoQM to your firm's unique risks and services, ensuring a truly effective and adaptable quality system. Remember, the SoQM should be scalable and adaptable to your firm's situation (like an airplane maneuvering in turbulent conditions).
Actions you can take this week.
Treat your System of Quality Management like a flight plan:
Choose two components from this list that are weakest or least documented. Assign clear ownership.
Identify the Quality Objectives.
Audit the list of Quality Risks in these components.
Design one tangible action per component. Adopt rapid implementation (doesn't have to be perfect).
Share results in your partner meeting.
Rinse and repeat these steps periodically to perfect your response to the Quality Risks!
Final thought
The new standards give us a solid flight map, but they don’t fly the plane. That’s your firm’s job.
Implementing an effective System of Quality Management whether under SQMS 1, QC 1000, or CSQM 1 isn’t just about writing policies or giving your staff a dead-copy of the Quality Management Manual.
It’s about a massive shift in mindset, and how your entire firm thinks and operates around quality.
It’s not easy. But it’s doable — only with the right mindset, tools, and support.
You don’t achieve great assurance quality on your own. Your quality management system is what helps you achieve it!
How would you rate this newsletter issue?
Well, that's it for now — hope you found this useful.
If you've any feedback or questions, write to me at [email protected], and I will personally respond to your email.
Until next time,
Athreya
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