Quality management: Details of a standard-setting journey

Sara Lord, CPA, is chair of the Auditing Standards Board (ASB), which recently issued a new standard that completes the suite of quality management standards ahead of an important implementation deadline in late 2025.

Lord, who discussed advice for firms on implementing the standards on a JofA podcast episode in 2022, joined the show again last week to talk about the end of a journey.

In this episode, Lord details the terminology changes made official by the ASB’s May 14 vote.

In the conversation, there is a mention of the standard being available sometime in June. Since recording, the link has gone live and is available here: Statement on Standards for Attestation Engagements No. 23.

What you’ll learn from this episode:

• An explanation of the changes implemented by the ASB in a May vote.
• Why the May vote marks “the end of a standard-setting journey.”
• Why Dec. 15, 2025, is an important date for implementation of the standards.
• Implementation guidance, including where to find resources.
• The sense of “rejuvenation” Lord feels each year at ENGAGE.

Play the episode below or read the edited transcript:

— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Neil Amato: Welcome back to the Journal of Accountancy podcast. This is Neil Amato with the JofA. In May, the AICPA Auditing Standards Board voted to issue a standard that completes the suite of quality management standards ahead of a Dec. 15, 2025, deadline for firms. Here to talk about that suite of standards and to explain potential next steps of the Auditing Standards Board and the next steps firms should take is Sara Lord, a CPA who is a partner at RSM and also chair of the Auditing Standards Board.

Sara is joining me while she is at ENGAGE. I am remote, but we’re happy to have Sara Lord back on the podcast. Sara, thank you for being here.

Sara Lord: Thanks, Neil. I’m excited to be here and having a really great time at the ENGAGE conference as well.

Amato: Good to hear that. Tell me this. The May 15 vote of the ASB, the Auditing Standards Board: Did that mark the end of a journey for the board?

Lord: Yes, Neil, it was an exciting vote. So, we voted out what is now SSAE 23. And, so, it’s quality management changes that are really the final step in standard setting for what we’ve been doing related to quality management. It adds some updates into the attest standards that are related to changes that were made through SSARS 26, changes to the reviews, compilations, and preparation standards.

Then also the one other big change in it is we’ve replaced the term “other practitioner” with two terms, “participating practitioner” and “referred to practitioner,” to make it easier for firms to understand the differences in what you need to do for quality management, depending on the role those practitioners might play in your attest engagement.

But it is really what we see as the final step of the suite of looking at all of our different standards and applying the quality management standards throughout every standard that was provided for assurance.

Amato: Great. That May 15 vote, was that just one standard that was updated or amended?

Lord: What we voted out is updates that do impact multiple sections of the attestation standards but only affect the attestation standards. Some of the changes you will see in ATC 105 and the general standard and then also changes in some of the specific subject matter standards, such as 205 and 210 related to review engagements.

It does impact multiple sections within the attestation standards, but only the attestation standards themselves.

Amato: One quick aside, we will link to the Journal of Accountancy article on the vote from May in the show notes for this episode. Just after that article came out, at least internally, someone was asking because of how we phrased things about “final.” Are there other QM, quality management, standards that could be issued?

Lord: Right now there are no additional quality management standards that are on our agenda and no other standards that we’re aware of that need to be conformed to the updated quality management standards. We do think this is the end of the standard-setting journey.

Not necessarily the end of the ASB’s journey. We’re still heavily involved in implementation efforts and collaborating with the Peer Review Board to make sure that as the standards move into implementation, Peer Review has all the intelligence that we have brought to the discussion in developing the standards. So, still staying involved, but no new standard setting anticipated from the ASB.

Amato: As you mentioned, you’re at ENGAGE as we record this segment. We plan to air it later in June. Can you tell me some about maybe what you’re presenting as it relates to the Auditing Standards Board or other updates?

Lord: Absolutely. I have the pleasure to speak, to present in the ASB/ARSC update, where we go through just highlights of what the two boards are doing and what’s coming in standard setting, as well as participate in the fireside chat. That’s always one of my favorites.

It’s just an open Q&A, so everything that our practitioners and our auditors want to know about what’s going on, they can bring and ask those to us on stage, and we’ll answer all of their questions. And, not things that I am presenting, but we’ve had some fantastic sessions on the quality management standards. There was a working session, a several-hour implementation working group, as well as different sections focused on small or sole practitioners, focused on different stages of the implementation. Lots of really great sessions going on this week at ENGAGE

Amato: You mentioned an acronym, ARSC. I know what it stands for, Accounting and Review Services Committee. But maybe for our listeners, can you explain a little bit about that committee and what it does?

Lord: Well, absolutely. Neil, that’s a great question. It stands for the Accounting and Review Services Committee. Mike Westervelt is currently chair of the ARSC, and what they do is look at all the standard setting related to reviews, compilations, and preparation engagements.

In addition to standard setting, they do a lot of guidance and interpretation. Really helping to make sure we have what we need for all of the practitioners working in that space to be able to implement the standards.

Amato: Now I mentioned at the intro to this segment a date that’s in the future, the not-too-distant future, 12/15/2025, Dec. 15, 2025. Why is that date important?

Lord: Dec. 15, 2025, is an important date in the world of the quality management standards because that’s the date firms are required to have designed and implemented their full system. At that point, you will need to have gone through your risk assessment, identified your quality risks, identified your responses and designed those, and then put them into place, make sure they’re implemented.

Also figured out your plan for monitoring. You haven’t needed to do all the monitoring yet, but you need to have the plan for what you will be doing over the course of the next year to monitor your system of quality management. It’s really the date that firms need to have gone through the whole process of adopting and implementing the standard.

Amato: That word you mentioned right near the end, “implementing.” About implementation, do you have some tips now? Can you direct listeners to key resources?

Lord: Yes, there’s so many resources available to help with implementation. I think for me the easiest way to get to them is to go to aicpa-cima.com and just type “quality management” into the search box. There is a way to feed through to get there. But if you type in QM, quality management, it’ll take you to the landing page that has all the different resources.

There’s two practice aids that are exceptionally good for implementation, one focused specifically on sole practitioners. That’s a question we do get fairly frequently is how do I right-size this for my firm? We have the one focused on sole practitioners and one focused on small and medium firms. It goes through the standard, helps have more of the practical application.

There’s an Excel document embedded. How do I actually do this? How do I make this happen in my firm? Then there’s also different resources available for some of the basic training. How do I go from my QC [quality control] into my QM? I have current quality control standards. How do they map? There’s a crosswalk to the new quality management standards, and the AICPA is going to be putting on another edition of the basics of quality management webcast. If you’re still in that stage, where you’re like, I really need a refresher, I’m still trying to get my hands around what we’re doing, all of that is readily available.

You asked about if I have any tips. I guess I would leave with two tips. One is, if you’re still early on in the implementation process, assign the right resources in your firm, decide who’s really going to work on this.

Depending on the size of your firm, it might be one person, it might be more than one person. Make sure they have some dedicated time to really get into the standard and understand what needs to happen for implementation. Then the second one, and this relates to that crosswalk idea, is all of this is building from firms’ current solid system of quality control.

We’re not going in and saying let’s reinvent how our firm provides audits, reviews, attest services. It’s really going in and saying, let’s do a risk assessment. Let’s identify what are the things that could go wrong in our firm and make sure you have designed and implemented responses to those considerations. Take what you have now and really build upon it to implement the new standards.

Amato: Thank you for that. Our JofA article that I mentioned earlier on the May vote mentioned that the standard is expected to be available sometime this month. Can practitioners still expect to access the standard this month?

Lord: Yes. The latest standard related to attestation engagements should be available still in June. For this month, yes.

Amato: That’s great. What else that maybe I could have asked you about, fun times in Vegas or anything else, that you have as a closing thought?

Lord: It’s been a really exciting week at ENGAGE. One of the most favorite parts I have of coming to this conference is being surrounded by literally thousands of CPAs. You get that rejuvenation of why what we do is so important and the value that we have as practitioners. When I think about that in the context of the quality management standards that we’ve been talking about, it’s really just that coming together of everything we do is to add value, to add confidence, to add trust to other people.

This is our opportunity as firms to take a little bit of time looking at ourselves and saying, where are we great? Where can we maybe add some things? Maybe we’re doing too much that we can back off because that might have been risky a couple of years ago, and we now understand that it’s not risky for us anymore.

I just love bringing together the pulse of the profession and how we can implement that through the enhancements to the quality management standards.

Amato: That’s well said. Sara Lord, thank you very much.

Lord: Thank you, Neil. I appreciate joining you today.