As per Nepal Standards on Quality Control (NSQC) 1, it is necessary for quality control for firm`s that perform audits and review of historical financial information and other, accordingly, the relevance of quality control the relevance of quality control issue in auditing services is equal importance like in other services. If quality control could not be done in auditing work, quality services could not be provided to client which may result negative consequences both for auditor and client including in overall all economy. Hence, every auditor should carry out the audit work based on formal quality control policy & procedures. The objective statement of quality control policies & procedures would be:
i. Professional Requirements
personnel in the firm should adhere to the principles of independence, integrity, objectivity, confidentiality and professional behavioral number of procedures may be framed to achieve this objective .for example, a firm may require all its personnel to make a written statement every year as to whether they hold any shares or any other interest in the enterprises being audited by the firm.
ii. Skills and Competence
the audit skills firm should be staffed by personnel who have attained and maintain the technical standards and professional required to enable them to fulfill their responsibilities with due care .for example, a firm can achieve this objective through proper recruitment procedures, periodic staff and a system whereby latest information relating to current development in professional standards, law, etc. is regularly communicated to audit staff.
Audit work should be assigned to such personnel as have the degree of technical training and proficiency required in the circumstances.
There should be sufficient direction, supervision and review of work at all levels to provide reasonable assurance that the work performed meets appropriate quality standards. For example, a firm may establish guidelines relating to the form and content of working papers; use of standardized forms, etc. similarly, the audit plans may identify the staffing requirements and timing of various phases of audit to facilitate delegation of audit now.
Where ever necessary, persons having appropriate expertise, within or outside the firm, should be consulted.
vi. Acceptance and Retention of Clients
Before accepting an audit, the firm should evaluate its independence and ability to serve the prospective client properly. A similar review should be made, on-going basis, of association with the existing clients.
The continued adequacy and operational effectiveness of the quality control policies and procedures should be maintained.