Assessing ISQM 1 Implementation: Evidence from Two Large Public Accounting Firms in Indonesia

Abstract

This study evaluates the implementation of the International Standard on Quality Management 1 (ISQM 1) in two large public accounting firms in Indonesia, namely KAP ABC and KAP XYZ. ISQM 1 represents a transition from a compliance-based quality control approach toward a risk-based quality management system that emphasizes continuous improvement and proactive risk assessment. Using a qualitative multiple-case study approach, data were collected through in-depth interviews and document analysis involving quality management personnel and audit-related documentation. The evaluation is based on the eight components of ISQM 1 and analyzed using the perspectives of Signaling Theory and the Resource-Based View (RBV). The findings indicate that KAP ABC demonstrates a higher level of implementation maturity by integrating ISQM 1 into its governance structure, quality strategy, and internal capability development. In contrast, KAP XYZ tends to implement ISQM 1 primarily as a regulatory compliance mechanism aligned with global network policies. The results highlight that effective ISQM 1 implementation depends not only on regulatory pressure but also on resource readiness, management commitment, and strategic orientation.