Statement on Quality Control Standards No. 7, A Firm's System of Quality Control

Statement on Quality Control Standards (SQCS) No. 7 supersedes all existing SQCSs. This SQCS establishes standards and provides guidance for a CPA firm’s responsibilities for its system of quality control relating to its accounting and auditing practice. It describes elements of quality control and other matters essential to the effective design, implementation, and maintenance of the system. This SQCS also sets forth the meaning of certain terms used in SQCSs issued by the Auditing Standards Board in describing the professional requirements imposed on firms and practitioners-in-charge.

This SQCS is to be read in conjunction with the AICPA Code of Professional Conduct, and is effective as of January 1, 2009.

A Firm’s System of Quality Control

(Supersedes Statement on Quality Control Standards [SQCS] No. 2, System of Quality Control For a CPA Firm’s Accounting and Auditing Practice, as amended; SQCS No. 3, Monitoring a CPA Firm’s Accounting and Auditing Practice; SQCS No. 4, Amendment to SQCS No. 2; SQCS No. 5, The Personnel Management Element of a Firm’s System of Quality Control — Competencies Required by a Practitioner-in-Charge of an Attest Engagement; and SQCS No. 6, Amendment to SQCS No. 2 [AICPA, Professional Standards, vol. 2].)

Introduction

1. The purpose of this Statement on Quality Control Standards (SQCS) is to establish standards and provide guidance for a CPA firm’s responsibilities for its system of quality control for its accounting and auditing practice. This statement describes elements of quality control and other matters essential to the effective design, implementation, and maintenance of the system. This statement is to be read in conjunction with the AICPA Code of Professional Conduct.

2. This statement also sets forth the meaning of certain terms used in SQCSs issued by the Auditing Standards Board in describing the professional requirements imposed on firms and engagement partners.

System of Quality Control

3. The firm must establish a system of quality control designed to provide the firm with reasonable assurance that the firm and its personnel comply with professional standards and applicable regulatory and legal requirements, and that the firm or engagement partners issue reports that are appropriate in the circumstances. A system of quality control consists of policies designed to achieve these objectives and the procedures necessary to implement and monitor compliance with those policies.