APES 320 Quality Management for Small Practices

APES 320 requires covered firms providing non-assurance services to maintain a documented system of quality management, including sole practices. Size the policies to your work, keep evidence that staff follow them and monitor whether they work.

What APES 320 Requires

APES 320 requires your practice to establish and maintain quality management policies, put them into use and evaluate their operation. Paragraphs 3.1, 3.6 and 3.17 cover the system, its written procedures and evidence that it operates.

The current title is APES 320 Quality Management for Firms that provide Non-Assurance Services. APESB reissued it in 2022, replacing the 2019 quality control version. Its transition takes effect at the boundary specified in APESB’s standard and commencement details.

For a small practice, use a risk assessment to connect each policy to a problem you need to prevent. For example, an inexperienced preparer can miss a tax adjustment. Your response can require principal review before lodgement, with the review recorded on the file.

That is a useful way to document your decisions. APES 320 itself sets seven elements and permits proportionate procedures. It does not adopt ASQM 1’s separate risk-assessment component or its full quality-objective framework. Paragraph 3.4 connects quality policies with the practice’s APES 325 risk management framework.

The Components of the System

APES 320 lists seven elements in paragraph 3.5, with ethical requirements addressed under Professional Standards. The following invented example uses a tax practice with one principal and one staff member.

Element	Small-Practice Objective	Practical Response and Evidence
Governance and leadership	Quality review happens despite deadline pressure.	The principal reserves review time and records approval before a return is lodged.
Professional Standards	Both people recognise ethical threats.	Record conflicts on acceptance and discuss confidentiality risks when work is assigned.
Acceptance and continuance	The practice accepts work it can complete competently.	The principal approves a client acceptance checklist and records any specialist support needed.
Resources	Staff have the knowledge and tools needed for their assigned work.	Keep a training record, access permissions and a plan for principal absence.
Engagement performance	Advice and returns have support for their conclusions.	Use working papers and record the principal’s review of tax adjustments.
Information and communication	Changes in a client’s circumstances reach the person preparing the work.	Record the change in the client file and tell the assigned preparer before work continues.
Monitoring and remediation	Repeated mistakes lead to changed procedures.	Arrange independent completed-file inspections and track corrective action through a later check.

These objectives are example practice choices. The standard’s paragraphs 3.5 and 4.65 set the element and monitoring requirements.

Under paragraph 3.13, the chief executive, managing partner or equivalent has ultimate responsibility. For a sole practice, that person is the principal. Giving a staff member a checklist or using an external reviewer leaves that responsibility with the principal.

A sole practitioner without staff can omit staff-specific procedures that do not apply, as paragraph 3.9 explains. A two-person practice needs procedures for assigning work and supervising its staff member.

Acceptance and Continuance: Your Onboarding Procedures

Before accepting work, assess the client’s integrity and whether your practice can perform the engagement within its ethical and practical limits. Paragraph 4.11 covers competence, resources and capacity, alongside the information needed for acceptance.

Create an acceptance record that connects the checks to your decision:

• Record the client’s identity, relevant owners and the authority of the person instructing you.
• Complete professional clearance where the appointment requires it, with permission for discussions with the previous accountant.
• Record conflict checks and how you resolve an identified threat.
• Assess the expertise and time needed, including any external support.
• Document the engagement terms and keep the client’s acceptance with the file.

A signed engagement letter before work begins is a sensible practice policy. APES 305 requires documented and communicated terms, while treating before-work timing and written acceptance as preferable. Our APES 305 guide separates those requirements from practice choices.

The Tax Practitioners Board’s proof-of-identity guidance distinguishes identity from a representative’s authority. A checklist marked complete needs the underlying check record. Use the accounting client onboarding checklist for the steps and APES 110 guide for ethical requirements.

For recurring work, make client continuance part of your annual planning. Paragraph 4.14 requires the necessary information when deciding whether to continue or accept new work for an existing client. Reassess sooner when ownership changes, a conflict emerges, misconduct concerns arise or the client requests work beyond your expertise. Record the decision and its reasons.

Writing an APES 320 Quality Control Manual for a Small Practice

Write a short quality management manual with one heading for each of the seven elements, then link to the records used in daily work. You can start with a few pages. The standard sets no page-count target or exemption for a short manual.

Under each heading, record the applicable requirement and the risk your procedure addresses. Name the person responsible, when they act and where the evidence is kept. Add the monitoring method and what happens when the procedure fails.

For the invented two-person practice, the engagement-performance section can say that the principal reviews every staff-prepared return before lodgement. The review record identifies the reviewer and unresolved questions. The monitoring section then explains who independently inspects completed work and how files are selected.

Professional-body resources can provide a starting point:

• CPA Australia’s Quality Management Manual Tool for Firms providing Non-Assurance Services is complimentary for members. It produces a Word manual using policies and procedures you tailor.
• CA ANZ’s Quality Management toolkit for small to medium firms with staff (non-assurance) is member-exclusive. A separate toolkit covers sole practitioners without staff.
• IPA’s 2025 Quality Management and Risk Management Templates include separate APES 320 templates for sole and multi-practitioner firms.

Use CPA Australia’s manual tool, CA ANZ’s staff toolkit or IPA’s template guide to choose the appropriate starting document.

Remove procedures that do not fit your practice and replace them with procedures you can follow. CPA Australia explains that assessors compare your documented procedures with operating evidence. A manual promising quarterly reviews creates a problem when your files contain no quarterly review records.

Monitoring, Remediation and the Annual Evaluation

Monitor your system throughout the year and inspect completed engagements on a documented cycle. Paragraph 4.65 requires at least one completed engagement for each engagement partner on that cycle. People who performed the engagement must not inspect it.

In the invented practice, the principal can check training records and acceptance decisions during normal management. Completed returns prepared or reviewed by the principal need an uninvolved inspector. Arrange an external practitioner with suitable competence and safeguards for confidentiality when neither person in the practice qualifies.

Select a sample that tests your actual risks. A staff-prepared return can test supervision, while a new company client can test acceptance records and engagement scope. Write down the inspection result even when the file meets the procedure.

When a deficiency appears, record the affected work and assess whether a client output needs correction. Assign remedial action and track completion under paragraph 4.74. Investigate the cause: a missing checklist step calls for a different response from a staff member lacking technical knowledge.

Paragraph 4.75 identifies root-cause analysis as an example method for finding what caused a deficiency. Choose a method that helps explain the problem. In the example, repeated missing review records can prompt a lodgement hold until the principal records approval. An uninvolved inspector then tests later files to see whether that change works.

An annual documented evaluation is a practical review point you can adopt in your manual. Have the principal sign its conclusion, identify open deficiencies and assign the next actions. APES 320 requires ongoing evaluation under paragraph 4.65, rather than a universal annual signed-evaluation rule. Your annual review must sit alongside ongoing monitoring.

Preparing for a Professional Body Quality Review

Prepare evidence that your written procedures match the work your practice performs. A professional-body review examines the system and its use, so keep supporting records available during ordinary work.

CPA Australia’s Best Practice Program selects members according to their services and history of compliance issues or professional indemnity insurance claims. Its assessors review the manual and evidence of the procedures described in it.

CA ANZ makes members offering services to the public eligible for review. Its Australian review procedure includes examining manuals and selected engagement files, discussing findings and issuing a results letter. Eligible sole practitioners can have a self-assessment review.

IPA’s Quality Review Program assesses professional-standard and legislative compliance, including the quality management policies its public practice certificate holders must maintain. Its member guidance links those obligations to the available templates.

Keep a review folder with your manual and proportionate risk assessment. Include acceptance and continuance records, training and CPD records, completed-file inspections and the deficiency log. Add your annual evaluation if your manual requires one. The CPD guide explains the training records separately.

The Tax Practitioners Board’s duties overlap with staff competence, supervision and documented procedures. Its supervision and quality-management guidance requires substantive review and sign-off before staff work reaches clients or returns are lodged. The TPB Code guide covers those obligations.

Choose one completed engagement and trace it from acceptance through preparation, review and the final output. If a procedure in your manual has no matching record, fix that procedure or its use before the next engagement follows the same path.