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Glossary/Quality and peer review

Monitoring and remediation

Monitoring and remediation is the SQMS No. 1 component under which a firm checks whether its quality responses work, finds deficiencies, determines root causes and fixes them.

CORAA TeamUpdated November 5, 2026

Definition

Monitoring and remediation is the component of the system of quality management in which the firm obtains information about whether the system is designed, implemented and operating effectively, evaluates findings to identify deficiencies, investigates root causes, and designs remedial actions. Sources include inspections of completed engagements (at least one completed engagement per engagement partner on a cycle the firm sets), peer review results, regulator inspections, and complaints. QM Section 10 required systems of quality management to be designed and implemented by December 15, 2025, with the first annual evaluation due within one year after that date.

Why it matters in an audit or review

Monitoring is how the firm learns its responses are not working. The firm determines whether an identified deficiency is severe and pervasive, which matters for the annual evaluation and conclusion. Root cause analysis is expected: if five files lack evidence of review, the question is why, such as a missing step in the checklist or heavy busy-season workloads. Remediation then targets the cause, and the firm tests whether it worked.

Example

Illustrative: a firm inspects one completed audit for each engagement partner. Three of seven files lack evidence that the partner reviewed journal entry testing. The root cause is traced to a template that has no sign-off line for that step. The firm adds the line, trains staff, and in the next cycle inspects two files to confirm the fix.

Common mistakes

Fixing the individual file without asking why it happened or whether other files have the same issue.

Sources

  • AICPA, QM Section 10, A Firm’s System of Quality Management (SQMS No. 1), monitoring and remediation process, including the evaluation of identified deficiencies and root cause investigation
  • AICPA, Questions and Answers About the AICPA Peer Review Program (June 2025) (SQMS effective date of December 15, 2025)

Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error

Standards

SQMS No. 1

Related terms

  • System of quality management
    A system of quality management is a firm's set of policies and procedures built around quality objectives, assessed quality risks and responses. SQMS No. 1 organizes it into eight components.
  • SQMS 1
    SQMS No. 1 is the AICPA standard requiring a CPA firm to design, implement and operate a risk-based system of quality management for its accounting and auditing practice. It replaced SQCS No. 8.
  • Engagement quality review
    An engagement quality review is an objective evaluation, performed by a qualified person who is not on the engagement team, of significant judgments made and conclusions reached before the report is released.
  • Peer review
    Peer review is an independent evaluation of a CPA firm's accounting and auditing practice by another qualified CPA. Firms that audit generally need one every three years under the AICPA program.

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