AS 1110: Relationship of Auditing Standards to Quality Control Standards

.01        The independent auditor is responsible for compliance with the standards of the PCAOB in an audit engagement.

.02        A firm of independent auditors has a responsibility to adopt a system of quality control in conducting an audit practice.2 Thus, a firm should establish quality control policies and procedures to provide it with reasonable assurance that its personnel comply with the standards of the PCAOB in its audit engagements. The nature and extent of a firm's quality control policies and procedures depend on factors such as its size, the degree of operating autonomy allowed its personnel and its practice offices, the nature of its practice, its organization, and appropriate cost-benefit considerations.

.03        Auditing standards relate to the conduct of individual audit engagements; quality control standards relate to the conduct of a firm's audit practice as a whole. Thus, auditing standards and quality control standards are related, and the quality control policies and procedures that a firm adopts may affect both the conduct of individual audit engagements and the conduct of a firm's audit practice as a whole. However, deficiencies in or instances of noncompliance with a firm's quality control policies and procedures do not, in and of themselves, indicate that a particular audit engagement was not performed in accordance with the auditing standards. 

Footnotes (AS 1110 - Relationship of Auditing Standards to Quality Control Standards):

[1][Footnote deleted.]

2 The elements of quality control are identified in Statement on Quality Control Standards (SQCS) No. 2, System of Quality Control for a CPA Firm's Accounting and Auditing Practice [QC section 20]. A system of quality control is broadly defined as a process to provide the firm with reasonable assurance that its personnel comply with applicable professional standards and the firm's standards of quality.