How to Turn SQMS Policies Into a Practical Monitoring Plan

If your firm has implemented SQMS No. 1 but hasn’t figured out how to manage ongoing monitoring, it may be simpler than you think. My recommendation?

Your firm already understands how this works for clients. You identify risks, document controls designed to address them, and retain evidence that those controls operated.

Apply the same approach to your own firm.

You don’t need to create a new checklist for every policy or spend weeks assembling documentation at year-end. You need a practical way to organize the work, assign responsibilities, and keep evidence as activities occur.

The key is creating a process that fits how your firm already operates, rather than adding another layer of administrative work. Here’s how I recommend putting these five ideas into practice, including a few time-saving approaches I’ve developed while helping firms implement SQMS No. 1.

Think of Your SQM Like an Audit File

Your system of quality management doesn’t need to be complicated or require specialized software. For most firms, a well-organized collection of Excel workbooks, Word documents, checklists, and supporting records can work.

Think about how you approach an audit:

Your firm’s SQM follows much the same logic.

Establish a consistent structure for policies, completed checklists, communications, sign-offs, and monitoring results. As activities occur, retain the supporting documentation rather than reconstructing everything at year-end.

The long-term benefit? Once your SQM audit file is established, you can roll it forward each year, updating the documentation and improving the process rather than rebuilding it from scratch.

The goal is simple: someone should be able to open your SQM audit file, understand what your firm is doing, and find the evidence supporting it.

Connect Your Policies to Evidence

Think about how you evaluate a client’s internal controls during an audit. If a control is documented, you may ask for evidence that it actually operated.

Your firm’s SQM is no different. A peer reviewer may request evidence that your documented policies and procedures are being followed.

The good news? Your firm is probably already performing many of these activities, often through your administrative team.

For example, your administrator may already maintain CPE records and track personnel compliance with firm requirements. Rather than creating another process, identify where those records are maintained and establish how someone will verify that the tracking is current and any exceptions are addressed.

Ideally, supporting documentation is organized in your SQM audit file. When that’s not practical, identify who maintains it, where it’s stored, and how completion is verified.

And you don’t need a separate monitoring checklist for every policy. Many responsibilities can be grouped into recurring reviews, making the process much more manageable.

My Biggest Monitoring Time-Saver: The Quarterly Partner Review

One of my favorite ways to simplify SQMS monitoring is to consolidate recurring oversight responsibilities into a single quarterly review.

Rather than relying on the quality management partner to remember everything that needs attention, put a recurring appointment on their Outlook calendar with a structured checklist.

For example, partners are often already considering potential independence conflicts throughout the year. A quarterly review provides an opportunity to confirm that any identified threats were evaluated and documented, and that nothing requiring follow-up was overlooked.

The quarterly review doesn’t replace procedures that need to happen as events arise. It’s a practical way to verify those activities occurred and document the partner’s oversight.

Spread Monitoring Throughout the Year

Under the old quality control standards, many firms were accustomed to completing annual inspections in a concentrated period. SQMS No. 1 requires a broader approach to monitoring that extends beyond engagement inspections.

That doesn’t mean adding work to every month of the year. It means scheduling activities when they make sense for your firm.

Some activities occur throughout the year, others quarterly or annually, and some are triggered by specific events.

A practical monitoring plan should help the firm see what needs to happen, when it needs to happen, who’s responsible, and what’s been completed.

Let Your Team Help Manage the SQM

One of the biggest misconceptions I see is that the partner responsible for quality management needs to personally manage every aspect of the system.

They don’t.

Much of the administrative work can be handled by managers or administrative personnel who may already be performing related responsibilities.

• Maintain the SQM audit file: Organize documentation, update workpapers, and roll forward the file each year.
• Track deadlines: Maintain the monitoring calendar, send reminders, and follow up on outstanding activities.
• Collect evidence: Retain completed checklists, communications, CPE records, and other supporting documentation, or maintain references to where they’re stored.
• Coordinate reviews: Prepare materials, track sign-offs, and help ensure identified issues receive appropriate follow-up.

The QM partner remains accountable for the responsibilities assigned to them, but they can focus their time on reviewing results, making decisions, and addressing issues rather than maintaining files and chasing documentation.

The goal is to make quality management part of how the firm operates, not another project sitting entirely on one partner’s desk.

Make Monitoring a Process You Can Repeat

Completing the monitoring checklist isn’t the finish line. The firm also needs to evaluate what it learned, address identified issues, and use those results to improve its system of quality management.

A well-organized SQM audit file, scheduled reviews, and a practical monitoring plan can make this much easier. As activities occur, documentation is retained, results are reviewed, and necessary changes are incorporated into the system.

Your first year may require more effort to establish the process, but future years should become more manageable as you roll forward the documentation and refine what works.

Ultimately, the best monitoring process is one that fits your firm’s operations and can be maintained consistently, not one that only gets attention when peer review approaches.