IFAC CAANZ Quality Management Risk Matrix - Illustrative Risk Matrix Companion to the Quality Management Toolkit

Sep 11, 2026

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Illustrative risk matrix companion to the quality management toolkit, designed to help non-network firms identify, assess, and document quality risks required by the ISQM 1 risk assessment process component. It explains how the matrix is built on the six ISQM 1 quality objective components and how each section uses quality objectives, illustrative risks, and illustrative risk responses. The guide includes tailoring guidance, defines what constitutes a quality risk, and stresses that it is not a substitute for reading the Quality Management Standards.

LanguageEnglish

CategoryGeneral

FormatPDF

Pages18

Reading Time6 min

AccessFree to download

Preface

How to use this illustrative matrix

1 Governance and leadership

Quality objectives, illustrative quality risks, illustrative risk responses

2 Relevant ethical requirements

3 Acceptance and continuance of client relationships and specific engagements

4 Engagement performance

5 Resources

6 Information and communication

ILLUSTRATIVE RISK MATRIX A Companion to the Quality Management Toolkit CONTENTS PREFACE 3 | How to use this illustrative matrix | 3 | | --- | --- | | 1 GOVERNANCE AND LEADERSHIP | 4 | | 2 RELEVANT ETHICAL REQUIREMENTS | 6 | | 3 ACCEPTANCE AND CONTINUANCE OF CLIENT RELATIONSHIPS AND SPECIFIC ENGAGEMENTS | 7 | | 4 ENGAGEMENT PERFORMANCE | 8 | | 5 RESOURCES | 11 | | 6 INFORMATION AND COMMUNICATION | 14 | PREFACE • The purpose of the illustrative risk matrix (guide) is to assist non-network firms in identifying, assessing and documenting quality risks as required by “The firm’s risk assessment process” component of the International Auditing and Assurance Standards Board’s (IAASB) ISQM 1. • This guide can be used in conjunction with the First-time Implementation Guide prepared by the IAASB to obtain a better understanding of the Quality Management Standards and their requirements. • Reading the material in this guide is not a substitute for reading the Quality Management Standards. • Practitioners should utilize the toolkit using their professional judgment and the nature and circumstances of their firm. The example quality risks and risk responses included are not exhaustive and are illustrative only. These require specific tailoring by each firm. • IFAC disclaims any responsibility or liability that may occur, directly or indirectly, as a consequence of the use and application of this toolkit. How to use this illustrative matrix 1. This matrix is based on the six components within ISQM 1 which comprise quality objectives the firm is required to establish. These should form the basis for identifying and assessing quality risks and designing and implementing responses. There may be circumstances when a quality objective, or an aspect thereof, may not be relevant to your firm or where an additional quality objective, or an aspect thereof is needed because of the nature and circumstances of the firm or its engagements. Consideration of additional quality objectives beyond those included in ISQM 1 is important, but adding new quality objectives is not expected to be common. 2. Each section in the guide presents quality objectives of a different component in a table which is to be used as follows: | Quality Objectives | Illustrative Quality Risks | Illustrative Risk Responses | | --- | --- | --- | | This column of each table identifies the quality objectives | This column provides some examples of possible quality risks | This column provides references to the applicable sections | | appearing in ISQM 1 for each of the six components. Firms | that could threaten each of the quality objectives shown. | of the Illustrative toolkit: Audit quality management – Small | | should consider whether each quality objective, or an | Firm-wide conversations should be used to identify specific | and medium sized firms. The toolkit provides illustrative | | aspect thereof, is relevant depending on the nature and circumstances of the firm or its engagements. For example, | risks to achieving the quality objectives identified that are relevant to your firm and its engagements. This illustrative | documentation (i.e., policies, checklists, sample letters and forms) to assist non-network firms when implementing | | the quality objective under Engagement Performance (b) | matrix is an example not a proforma. | responses to address and mitigate quality risks identified. | | addressing direction, supervision and review may not be relevant for a sole practitioner. | A quality risk is a risk that has a reasonable possibility of:
• occurring; and
• individually, or in combination with other risks, adversely affecting the achievement of one or more quality objectives.
Additional quality risks identified should be added to the relevant component table when you prepare your firm matrix. | Further detail will likely be required than what is included in the illustrative risk responses.
Firms also need to document how the re

FAQs

What is the purpose of the illustrative risk matrix in this guide?

It supports non-network firms in identifying, assessing, and documenting quality risks as required by the ISQM 1 risk assessment process component.

How is the matrix structured and what is it based on?

The matrix is based on the six ISQM 1 components that form the quality objectives the firm must establish, and each section presents those objectives with illustrative risks and risk responses.

Does this guide replace reading the ISQM 1 Quality Management Standards?

No. Reading the guide is not a substitute for reading the Quality Management Standards, and the example risks and responses require tailoring for each firm.

Sep 11, 2026

Upload by Mason