Quality Control Developments in Moore Stephens Mexico

­­­­Since the establishment of the “Moore Stephens México” network (MSMX) in 1997, its member firms have been subject to quality control reviews for audit and assurance engagements, made either by Moore Stephens International (MSIL) or by other firm’s partners involved in the process. This process is meant to ensure that firms effectively follow established international audit and assurance regulations, also required by Moore Stephens International (MSIL).

Mexico Audit and Assurance, and Quality Control Regulations
In 2010, the Mexican Institute of Public Accountants (IMCP) issued a quality control review regulation, which requires IMCP affiliated firms (all MSMX firms are affiliated with IMCP) to annually manifest, in writing, the compliance of quality control matters; in addition they are subject to quality control reviews performed by IMCP audit professionals. During 2017 the following MSMX member firms were selected to be reviewed by the IMCP, all receiving satisfactory results: Marcelo de los Santos y Cía., S.C., Javier de los Santos y Cía., S.C., and Juan Antonio Cedillo y Cía., S.C.

In 2012, the IMCP fully adopted the International Standards on Auditing (ISA) for performing audit engagements in México, after a convergence period where Mexican Audit Standards were modified to gradually be aligned to the ISA’s. It is worth noting that reviews, attestation and other related service regulations are still regulated by local standards, however similar to the international standards.

In México, one of the main audit engagement drivers for small to mid-size companies is the tax requirement, which became optional in 2014. This is required to perform an audit for tax purposes and requires an audit based on ISA’s. The Mexico Federal Tax Authorities also perform reviews of the audit work made by the individual partner signing off the audit report and audit tax report for this type of audits. All MSMX member firm partners which perform this type of audits are also subject to these quality control reviews.

MSIL Quality Control Activities
In 2015 MSMX firms were to be reviewed by a Monitoring Quality Control Review Team (QC Review Team), which was formed within the MSMX network. The QC Review Team was formed by MSMX firm audit partners and one director directly involved in audit and assurance engagements within their firms. Daniel Echeverria, Jorge Navarro, Javier Guerrero, Fernando Valero, Liliana Blancas, Guillermo Treviño form this group, with Rodrigo Sotomayor as the QC Review Team Coordinator.

The QC Review Team assisted MSMX network firms in adjusting or defining their internal quality control policies by implementing the Quality Control Firm Manual. This Manual was recommended by the International Federation of Accountants (IFAC), and provides suggested formats and templates to help unify quality control criteria within the MSMX network.

\Additionally, the QC Review Team meets twice a year to follow-up on the quality control reviews and to discuss ways to improve the reviewing process. These members also participate in MSMX network seminars and conferences to promote quality control issues and audit and assurance regulations. Finally, several QC Review Team members participated in international seminars within Moore Stephens network, in Brazil in 2015 and in Peru in 2017.

Since the forming of the new QC Review Team, two rounds of quality control reviews have been performed (first level review), for all MSMX firms for audit engagements which ended on December 31, 2014 and 2016. These reviews were performed using the MSIL methodology, considering quality control systems and audit engagement work papers for such periods. In addition, the QC Review Team members have performed quality control reviews for new firms that are in the process of becoming MSMX member firms.

The QC Review Team members identifies areas of improvement and provides suggestions or recommendations after each review. Each MSMX member firm is responsible for implementing an improvement plan based on the quality control review findings.

It is expected for MSIL to schedule a second level review of MSMX network firms, to verify MSIL requirements and other regulation compliance (ISQC1 and other audit and assurance standards), considering the reviews results performed by the QC Review Team.

For more information on the quality control developments made Moore Stephens Mexico, please contact CPC Rodrigo Sotomayor González, rsotomayor@sotomayorelias.net.