Companies Act 2014 section 1496

Organisation of quality assurance system

Section 1496 sets out how a recognised accountancy body must organise its quality assurance system to ensure independence, adequate resourcing, proper reviewer selection, and proportionate review of statutory auditors and audit firms.

• The quality assurance system must be independent of the auditors and firms it reviews, with secure funding free from undue influence, and adequate resources to carry out its work effectively.
• Reviewers must have appropriate professional education and experience, be selected through an objective conflict-free process, and must not have been associated with the auditor or firm under review for at least three years.
• Reviews must cover compliance with auditing and sustainability assurance standards, independence requirements, resources spent, fees charged, and internal quality controls, with each review documented in a written report and conducted at least every six years on a risk-analysis basis.
• Auditors and firms must implement review recommendations within a reasonable period or face disciplinary action, and the accountancy body must publish the overall results of its quality assurance reviews annually.