Under the Quality Management standards (SQMS 1 / QM Section 10), a CPA firm must establish a risk-based approach to quality management. Which of the following is a NEW component introduced by SQMS 1 that was not explicitly a component in the previous QC standards?

Answer options:

Governance and Leadership.

Information and Communication.

Engagement Performance.

The Firm's Risk Assessment Process.

How to approach this question

Full Answer

D.The Firm's Risk Assessment Process.✓ Correct

SQMS 1 introduced 'The Firm's Risk Assessment Process' as a distinct component, requiring firms to proactively identify and respond to quality risks. 'Human Resources' was broadened to 'Resources'.

Common mistakes

Confusing old QC elements with new QM components.

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