AUDIT QUALITY MATURITY MODEL

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Context

• The Institute of Chartered Accountants of India (ICAI) has launched the Audit Quality Maturity Model (AQMM).

Aim

• Enhance the quality of audits and improve transparency.

Audit Quality Maturity Model (AQMM)

• The Audit Quality Maturity Model (AQMM) is a combination of different Audit Quality Indicators (AQIs).
• It helps in the cross-functional evaluation of key areas of audit engagements and backend practices at the audit firm level, including operations of the firm, like –
  • Revenue budgeting and pricing,
  • Audit practice manual,
  • Budgeting of engagements,
  • Timesheet,
  • Use of technology adoption,
  • Quality control for engagements,
  • Human Resource Management,
  • Resources planning and monitoring,
  • Performance evaluation and compensation,
  • Physical and IT infrastructure, etc.
• The AQMM has been developed by ICAI after detailed International Research and widespread outreach activities conducted across India on systems to enhance their audit quality.

MANDATORY EVALUATION OF THE AUDIT QUALITY MATURITY OF THE FIRMS USING REVISED AUDIT QUALITY MATURITY MODEL (AQMM Rev v1.0)

• ICAI has mandated the Audit Quality Maturity Model from April 1 to all the firms falling under the specified criteria.
• The firms auditing the following types of entities shall be mandatorily required to undertake an evaluation of their audit quality maturity using the Audit Quality Maturity Model Revised Version 1.0 (AQMM Rev v1.0):

1. 1. A listed entity; or
   2. Bank other than a co-operative bank (except multi-state co-operative banks); or
   3. Insurance Company

• The firms conducting only branch audits have been excluded from the mandate.
• These firms are required to compulsorily self-evaluate their audit quality maturity using the AQMM.
• The level of the firm arrived at by the peer reviewer will be hosted on the ICAI website.
• Firms auditing listed entities, banks, or insurance companies are mandated to get their audit quality maturity evaluation through AQMM rev v1.0, which aims to evaluate not only the audit engagements but also audit practice at the firm level.

Institute of Chartered Accountants of India (ICAI)

• The Institute of Chartered Accountants of India (ICAI) is India's largest professional accounting body under the administrative control of the Ministry of Corporate Affairs.
• It was established on 1 July 1949 as a statutory body under the Chartered Accountants Act, 1949 enacted by the Parliament for the promotion, development, and regulation of the profession of Chartered Accountancy in India.
• During its nearly six decades of existence, ICAI has achieved recognition as a premier accounting body not only in the country but also globally, for its contribution in the fields of education, professional development, maintenance of high accounting, auditing, and ethical standards. ICAI now is the second-largest accounting body in the whole world.

PRACTICE QUESTION Q. Which if the following types of entities are mandatorily required to undertake an evaluation of their audit quality maturity using the Audit Quality Maturity Model Revised Version 1.0 (AQMM Rev v1.0) as mandated by the Institute of Chartered Accountants of India (ICAI)? 1.       A Listed Entity. 2.       Cooperative Banks 3.       Insurance Company. 4.       Commercial Banks. a)       1 and 2 only b)      2, 3 and 4 only c)       1, 2 and 4 only d)      1, 3 and 4 only  Answer: d

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