| A64. | The purpose of monitoring compliance with quality control policies and procedures is to provide an evaluation of: |
| Adherence to professional standards and legal and regulatory requirements; |
| Whether the system of quality control has been appropriately designed and effectively implemented; and |
| Whether the firm's quality control policies and procedures have been appropriately applied, so that reports that are issued by the firm or engagement partners are appropriate in the circumstances. |
| A65. | Ongoing consideration and evaluation of the system of quality control include matters such as the following: |
| Analysis of: |
 | New developments in professional standards and legal and regulatory requirements, and how they are reflected in the firm's policies and procedures where appropriate; |
| Written confirmation of compliance with policies and procedures on independence; |
| Continuing professional development, including training; and |
| Decisions related to acceptance and continuance of client relationships and specific engagements. |
| Determination of corrective actions to be taken and improvements to be made in the system, including the provision of feedback into the firm's policies and procedures relating to education and training. |
| Communication to appropriate firm personnel of weaknesses identified in the system, in the level of understanding of the system, or compliance with it. |
| Follow-up by appropriate firm personnel so that necessary modifications are promptly made to the quality control policies and procedures. |
| A66. | Inspection cycle policies and procedures may, for example, specify a cycle that spans three years. The manner in which the inspection cycle is organized, including the timing of selection of individual engagements, depends on many factors, such as the following: |
| The size of the firm. |
| The number and geographical location of offices. |
| The results of previous monitoring procedures. |
| The degree of authority both personnel and offices have (for example, whether individual offices are authorized to conduct their own inspections or whether only the head office may conduct them). |
| The nature and complexity of the firm's practice and organization. |
| The risks associated with the firm's clients and specific engagements. |
| A67. | The inspection process includes the selection of individual engagements, some of which may be selected without prior notification to the engagement team. In determining the scope of the inspections, the firm may take into account the scope or conclusions of an independent external inspection program. However, an independent external inspection program does not act as a substitute for the firm's own internal monitoring program. |
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