Countdown to QMS: Challenges and good news
February 13, 2025 | Faye Hayhurst, CPA
CPAs have a lot of experience with meeting deadlines — and a big one is looming for every firm that performs engagements under SSARS, SAS or SSAE: The implementation of
Quality Management (QM) standards for the firm’s accounting and auditing (A&A) practice by Dec. 15, 2025.
Most new standards affecting A&A work are applied at the engagement level, but the QM standards are foundational to how a firm approaches its A&A practice and manages quality. Every firm performing A&A work must shift from its current system of quality control to a new system of quality management.
While this sea change presents challenges, there is also plenty of good news.
Challenge: Scrapping a system that’s been in place for a long time and starting over.
Good news: The structure of the new system is different and has to be learned. But the content — the policies and procedures put into the system — will mostly be things the firm is already doing. Have the firm’s current quality control documents close at hand during the design phase.
Challenge: Understanding what’s different under the new standards.
Good news: The core change is performing risk assessment, something CPAs are familiar doing with their clients. Under QM, risk assessment is turned inward to a firm’s A&A practice. It’s also monitored on an ongoing basis — at least annually — and adjusted as needed to respond to changes in risk or exposure of gaps in risk management.
Challenge: Designing and implementing a new system.
Good news: Tools and
education abound from the AICPA and third-party practice aid providers, as well as the MNCPA.
Challenge: Envisioning what the final system should look like.
Good news: There is no one right way to document the system of QM. For example, a quality control document is no longer required as it was under SQCS 8, but a firm may choose to still have one. Most QM tools use an Excel workbook for the firm to document its assessed risks and responses. That may be the best and easiest way for most firms, but it’s not required. The key is that the firm needs to be able to show, through written documentation, how it meets the requirements of the standards.
Challenge: Preparing to pass the next peer review after the standards change.
Good news: The standards make clear that there is no expectation of perfection; it’s normal to identify things that have been missed and to adjust accordingly. But a firm must make a good faith effort to implement QM — including performing a risk assessment — if it expects to achieve a pass report for a peer review year ending after Dec. 15, 2025.
Challenge: Figuring this out alone.
Good news: In addition to accessing tools, practice aids and education, a firm can hire a peer reviewer to consult on their quality management system efforts. Use the AICPA’s
reviewer search tool (“I am a firm looking for an outside party or subject matter expert to perform consulting services for my firm”) to find peer reviewers offering this service.
Challenge: Deciding where to start.
Good news: This is the easy part: Read the standard! Start with
SQMS No. 1. It isn’t that long or unduly technical. Highlight anything that seems new or different from current practice. Mark, in a different way, the parts of the standard sound like what you’re already doing. Don’t forget to include the application material at the end of the standard. Becoming familiar with the other standards in the QM suite is necessary as well, but SQMS No. 1 is the key.
Get moving today!
Consider this timeline to
tackle implementation in digestible chunks to keep you on track.
Topics: Management
Faye Hayhurst, CPA
Faye Hayhurst is the MNCPA director of finance and administration. She is committed to using numbers to tell relevant stories, although she also employs words, charts and occasionally clothing to communicate a message. While some have questioned her about the pressures of being the CPA for the MNCPA, Faye considers presenting financial information to fellow CPAs a dream job. Outside of storytelling with numbers, Faye enjoys directing her church's handbell choir, visiting national parks and other scenic places, and checking out the chocolate products at Trader Joe's. Faye can be reached at 952-885-5540 or fhayhurst@mncpa.org.
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