Caseware Africa Transforms Firms’ Quality Management with their new SQM App

An innovative solution that proactively manages quality

Johannesburg, 19 August 2022: Powering 20 000 users across the African continent, Caseware Africa, a division of Adapt IT, is a global leader in audit and financial reporting software. With decades of expertise in helping auditors and accountants automate compliance, Caseware Africa has introduced a brand-new cloud-based app to help firms manage their System of Quality Management: SQM Quality.

SQM Quality is designed by audit, data, and quality experts, and provides a quality management system intended to assist firms in fully, and efficiently, complying with the requirements of the International Standard on Quality Management 1 (ISQM 1), whilst leveraging the benefits of technology to proactively facilitate quality management, and ultimately, promote compliance.

The industry shift from the International Standard on Quality Control 1 (ISQC 1) to ISQM 1 has signalled a subtle, yet significant change in focus from ‘control’ to ‘management’. In pursuit of compliance to the new standard, professional audit and accounting firms providing services in various fields, have been required to update their engagements and processes to establish a system of quality management that extends beyond the possession of a manual with policies and procedures.

“In light of how the new standard has done away with most of the mandatory policies and procedures previously included in ISQC 1 and leaving it up to the firms to determine what’s most appropriate for their specific circumstances, it’s more important than ever for every employee to be their own compliance officer. In addition, it is imperative that firms establish a firm-wide environment of collaboration between people and technology to address the problems of the past, and ultimately make compliance more efficient,” says Christiaan Steyn, Assurance Product Manager at Caseware Africa.

SQM Quality empowers finance professionals to design, operate, and monitor their quality management system through the processes of establishing quality objectives, identifying, and assessing risks, and designing and implementing risk responses, in a manner that is effortless and efficient. It also includes a component that allows for the monitoring and remediation of processes to drive continual improvement of the system and, ultimately, the firm’s ability to fulfil the requirements of ISQM 1.

The Benefits of SQM Quality:

SQM Quality empowers professionals and firms to easily attend to all parts of the quality management system.
Numerous international standards are supported, empowering firms to meet the requirements of various local markets across the world with a single system solution.
User permissions differentiate between roles and responsibilities across the firm.
Responsible parties are guided to document their understanding of the firm, and the nature of its services, to assist in identifying and assessing quality risks.
Firms can select objectives, risks, and policy and procedure responses, from a pre-populated library that can be customised and expanded upon as needed.
Network firms can export network-wide objectives, risks, and responses to member firms.
A built-in form builder enables firms to design tasks as instructions to users to direct, and track, the completion of actions linked to policy and procedures responses.
Throughout the process, users can hyperlink to documents and other records saved elsewhere on Caseware Cloud for ease of reference and secure storage.
SQM Quality includes a firm-specific quality risk assessment matrix that automates the identification of quality risks for which responses are required.
The user with the final responsibility of the system of quality management will be able to review dashboards of information and oversee the publishing, or export, of that information as required by the firm’s operations.

Designed to optimise the changes and opportunities of ISQM 1, SQM Quality enables firms to design, operate, and monitor their system of quality management with ease, offering a single solution that attends to all parts in a way that is automated, accurate, and complete.

“In a rapidly developing world where spreadsheets are no longer the answer, everyone is accountable and collaboration is key. A solution like SQM Quality becomes more than a ‘nice to have’, it’s a necessity and an investment in efficiency, accuracy, and automation that will get things done – and done properly.” Steyn concludes.

November 8, 2021February 10, 2023

ISRS4400(R): Agreed Upon Engagements

What is an agreed-upon procedures engagement?

This can be defined as an engagement in which a practitioner agrees on specific procedures, usually audit-like in nature, with a client or a third party, and provides a report on findings against those agreed procedures. There is no assurance provided by the report, and the user is left to draw their own conclusions based on the agreed procedures and the findings reported against them. Previously, these were often referred to as factual findings.

Are these engagements subject to a standard?

Yes! The standard that applies to Agreed-Upon Procedures is ISRS4400 – International Standard on Related Services 4400 (Revised): Agreed-Upon Procedures Engagements. This standard was recently revised by the IAASB, and the revised standard is applicable for engagements where the terms of engagement are agreed on or after 1 January 2022. The revision of this standard by the IAASB (previously ISRS4400 – which replaced ISA920) Engagements to Perform Agreed Upon Procedures Regarding Financial Information) addressed the increasing demand for these types of engagements for both financial and non-financial information and incorporated the types of updates generally being made to the standards to enhance professional judgment, independence, accountability and consistency in the profession.

Are these engagements common?

Yes, increasingly so. In many cases, agreed-upon procedures are requested by third parties on specific aspects of a client’s business, and often these parties have a template or format for the reports they require. When this happens, practitioners may not always identify that the engagement being performed falls into the scope of ISRS4400. The term “factual findings report” may be more commonly used or identified. These engagements are the ones that fall into the scope of ISRS4400 (and are now referred to only as findings, and not factual findings). Some common engagements that fall into the scope of agreed-upon engagements include:

Reports to a funder on whether grant expenditure by a grant recipient is incurred in terms of the conditions of the approved grant or contract.
Confirmations or certificates of turnover provided to franchisors on the turnover earned by franchisees.
The verification of claims against investment or incentive schemes managed by the Department of Trade and Industry (for example in automotive, IT, import and export sectors).
Section 18 certificates for non-profit organisations confirming that donations are spent for the intended purpose.
Business TV licence audits.
Due diligence reviews.
Confirmations of earnings or EBITDA or other calculations for debt covenants

What is challenging about accepting and conducting these engagements?

Even with the revisions in the new standard, the nature and extent of these engagements varies greatly in size, frequency, complexity and risk. Although they are not assurance engagements, the report issued by a practitioner must still comply with the standard as well as with the extant ISQC1 and the new international standards on quality management – these will become effective in 2022, and thus, still exposes practitioners to quality risks. Given the extremely varied nature of these engagements, applying a consistent approach has been challenging in the past. Some of these challenges have arisen from the following:

The previous standards applied to financial information which provided very little guidance on procedures that were compliance, performance or non-financial in nature.
Difficulty in establishing a consistent, repeatable approach between engagements and between recurring engagements. Because all engagements require procedures that are unique to the activity, it is not possible to apply a standard set of work programmes, and therefore, very difficult to obtain, and maintain, a consistent approach with comparable work flows, work programmes and internal quality management mandates.
The standard is not well known and does not generally form part of the graduate accounting education syllabi. This means that practitioners need to read, understand, and interpret, the standard for themselves, if they are aware of it at all. This has resulted in the past in inconsistent approaches between practitioners.
Difficulty in communicating requirements of procedures with clients or third parties. The engaging party is usually clear on what they need in a report and what it will be used for, and thus provide their understanding of the procedures they require to be performed. In the execution of these procedures, there is often more detail or a sub-set of additional processes that the practitioner needs to perform to identify and acquire the information required to report against the original method. It can be challenging for team members to determine how to obtain the evidence needed to perform the required tasks, or what to request from the client – this may need to be explained differently to the wording of the agreed-upon process.
Where these engagements are performed manually i.e., not through specifically designed software, there is substantial repetition between recording the agreed-upon procedures in an engagement letter; doing so again in the working papers and again in the Agreed-Upon Procedures Report. Where the engagement comprises many procedures, this is very time consuming and subject to many errors of omission or transposition and carries a higher risk of the report not aligning with the initial required methods in the engagement letter.
The higher volume of manual documentation and repetition can also result in these engagements not being as viable – in terms of the time required in relation to the fees earned for these activities.
There is also the additional cost of having to repeat, or re-populate, documentation on engagement files for recurring activities in said manual files.
The use of manual engagement files always carries an increased risk to practitioners’ inefficiencies through the requirements for manual signoffs, document misplacements, lack of evidence on completion, timelines of reviews etc., and ensuring that file assembly and archiving requirements are met.

An efficient, quality solution to conduct Agreed-Upon Procedure engagements

Caseware Africa has introduced a cloud-based Smart Engagements solution for Agreed-Upon Procedure Engagements called ISRS AGREED UPON, that addresses and resolves many of the quality and efficiency challenges.

By using ISRS AGREED UPON, for engagements, files can be populated with client and standing information relating to acceptance, continuance, skills, capacity, and independence requirements in the first engagement, and rolled forward to subsequent encounters, enabling practitioners to harness efficiencies in recurring events.
The procedures included in the ISRS AGREED UPON, solution have been compiled to ensure compliance with the requirements of the new ISRS 4400(R) standard relating to acceptance and continuance, ethical and independence requirements and the other changes brought into the new standard, for example, the use of experts. These changes have been fully incorporated and thus practitioners using this product will not have to rewrite previous manual work programmes for the changes in the standard.
ISRS AGREED UPON, can be adapted for the level of guidance required by your team. There is an option to select procedures that are core, or that are extended. Both facilitate compliance with the ISRS(R)4400 standard. Core procedures create efficiencies by reducing the number of procedures required for experienced users who understand the requirements for documentation, whist the extended procedures facilitate better documentation and therefore, make compliance easier for inexperienced users who require more detailed prompts or questions in order to arrive at the conclusions that an experienced user would.
ISRS AGREED UPON, automates the inclusion of the actual agreed-upon procedures throughout the engagement file and related documents. The procedures themselves are captured once, and the engagement letter, work programmes and the Agreed-upon Procedures Report is populated from this source. This drives efficiencies by reducing the amount of repetitive documentation, and also resolves challenges relating to inconsistencies between agreed processes and reported procedures and findings.
ISRS AGREED UPON, enables the practitioner to “reword” or tailor an initially agreed procedure to an inquiry or procedure that will facilitate asking for relevant information from clients in a manner that is understandable and will elicit the correct information/response. This “rewording” continues to be linked to the originally agreed procedure, ensuring a clear link between the work performed and the procedure to which it relates.
ISRS AGREED UPON, enables the practitioner or team members to capture, at the time that the procedure is performed and concluded upon, the finding that should be integrated into the Agreed-upon procedures report. This finding is automatically transferred to the report within ISRS AGREED UPON,, creating efficiencies between executing procedures and compiling the Agreed-upon procedures report. This also ensures that the agreed-upon procedures are directly aligned to the conclusions per procedure that are included in the Agreed-upon procedures report.

Last say

One of the primary drivers of the IAASB’s revision of the Agreed Upon Procedures standard was the increasing use of these engagements for both financial and non-financial information. Taking into consideration the changes and expansion in financial and non-financial reporting and the increased level of assurance that users, funders, and regulators require from businesses, the investment in a solution that facilitates compliance and drives efficiencies will ensure that you are able to viably provide these services to clients with confidence, increasing the value offered to clients and improving efficiencies and quality.

July 12, 2021February 10, 2023

The Future of Financial Reporting in the Public Sector

Proposed amendments to Kenya’s Public Finance Management (PFM) Act, giving Chief Financial Officers only one month to submit their Annual Financial Statements to the Auditor General after the end of the financial year, are sending shockwaves through the public sector accounting community in Kenya, reports international auditing and financial reporting software company, Caseware Africa.

CPA Rexon Wachira, a public sector consultant at Caseware Africa’s Nairobi office, says the process of compiling and reviewing these entities’ Annual Financial Statements typically takes public sector financial professionals three months or longer, challenged by the fact that in the fourth quarter in a year, reports must be submitted in the same period as well. “There is grave concern that it may not be possible to produce Annual Financial Statements so quickly,” he says.

Stephan van der Merwe (CA) SA, Specialist in Public Sector Solutions at Caseware Africa, notes that audit opinion is typically used to measure the entity’s performance. “The better your audit opinion is, the better the assessment of your entity’s performance, which is another reason why these Annual Financial Statements can take a long time to prepare; every entity wants to be very thorough to ensure they get a good audit opinion. Now with the proposed tighter deadlines, this could pose a huge risk for entities, and therefore, introducing efficiency into the process is now more important than ever before,” he says.

While the amendment is still in the pipeline, Caseware Africa says now is the time for public sector entities to review their processes and do away with time-consuming and error-prone manual systems to ensure that their reporting is more efficient, accurate and compliant.

Caseware’s IPSAS and IFRS Financial Statement solutions enable public sector finance professionals to automate the preparation of compliant financial statements on either International Public Sector Accounting Standards (IPSAS) or International Financial Reporting Standards (IFRS), whichever is required. This includes flexible lead sheets and a centralised document manager to organise all working paper collateral. Both these solutions simplify collaboration, consolidation and assure preparers of compliance with international standards.

Mr. van der Merwe notes: “In the East African public sector, several entities have successfully implemented either Caseware Africa’s IPSAS or IFRS Financial Statements solutions for process efficiency, data integrity and compliance. In the past, the focus among Kenya’s public sector customers was mainly on harnessing Caseware Africa to reduce manual processing, but we now see a sharp surge in interest in using our solutions to achieve compliance in terms of both international standards and reporting deadlines.”

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