SQCS 8 becomes SQMS 1 – and it hurts if you don't get it right

The SQMS 1 (Statement on Quality Management Standards No. 1 – the International Standard on Quality Management 1 tailored to the US regulatory and professional context) replaces the current SQCS 8 (Statement on Quality Control Standards No. 8.) and that means a fundamental change in the way CPA firms deal with quality management. In the United States, SQMS 1 is issued directly by the AICPA’s Auditing Standards Board (ASB). It is adopted as an official professional standard for CPA firms.

The new reality: from quality control (SQCS 8) to quality management (SQMS 1)

In the United States, the AICPA's Statement on Quality Control Standards No. 8, also known as SQCS 8, which historically governed quality control for CPA firms performing audit and assurance engagements, is being replaced. The new Statement on Quality Management Standards  No. 1, or SQMS 1, introduces a more proactive and risk-based approach to quality management, aligning closely with the new international ISQM 1 standard. This shift reflects the broader move away from quality control and toward a more dynamic system of quality management tailored to each firm’s specific risks and circumstances.

At first glance, SQMS 1 may seem like a technical update, but don't be fooled: it marks a fundamental shift for accounting firms. While SQCS 8 focused primarily on documented procedures and controls, SQMS 1 introduces a more integrated and dynamic system of quality management, built around risk assessment, clear quality objectives, and ongoing monitoring and improvement. It’s a move from static compliance to proactive quality leadership. 

It may sound abstract at first, but it has real implications for CPA firms in the United States. Firms need to shift their internal processes from static, checklist-based procedures to dynamic, continuously improving systems. Or, metaphorically, from a handbook to a living, breathing system. This shift can be challenging – especially for smaller firms, which often face the task of implementing complex regulatory standards like SQMS 1 without the luxury of extensive resources or dedicated compliance teams. That's why it's essential for solutions to be practical, easy-to-manage, and realistic – core principles that guided the development of WoodWing Scienta from the early beginning.

The pain points of SQMS 1

Many CPA firms in the US currently have limited or no understanding of the new SQMS 1 standard – but they will need to get familiar with it very soon! SQMS 1 isn't merely an optional guideline; it's a mandatory regulatory requirement for all CPA firms. Firms that fail to adequately prepare, risk receiving poor evaluations during inspections or peer reviews.

Clearly, significant changes are ahead – but what exactly does all of this mean in practice? We’ll outline the key areas where SQMS 1 will have the greatest impact, and what your firm needs to do to successfully adapt..

1. Insufficient awareness

Many CPA firms don't feel the urgency yet – even those that are typically well-organized. Recent conversations with a range of small to mid-sized CPA firms across the US revealed that many organizations have barely started addressing SQMS 1 and remain largely unaware of the significant impact this new standard will have on their practices..

2. Lack of time and capacity

Responsibility for managing the transition to SQMS 1 is typically in the hands of the quality controller(s) or designated compliance lead. In reality, however, we often see implementation tasks piling up onto the already overloaded desks of the quality manager. The outcome is as predictable as you'd expect. Procrastination, fragmented efforts, and increased stress. With preparation time already limited, delaying action only heightens pressure as the deadline approaches – leaving even less time to fully understand and properly implement the new requirements.

3. Thinking in terms of risks is new and difficult

SQMS 1 requires CPA firms to identify their own quality objectives, assess associated risks, and implement appropriate actions. Many firms, especially smaller ones, are not accustomed to thinking this way. Fortunately for those organizations, SQMS 1 provides clear guidance by defining several key quality objectives tied directly to its core components (which are derived from the international standard (ISQM 1) SQMS 1 is based on. Firms also retain the flexibility to define additional objectives that align specifically with their own practice areas and unique circumstances..

4. Everyone has to participate - but no one really feels responsible

SQMS 1 isn’t just the responsibility of one quality manager. The standard requires collective engagement – from associates and managers all the way up to partners. Only with active participation across the firm, risks can be effectively identified, acknowledged, and mitigated in day-to-day operations..

5. Firms that fall short will face dire consequences

A negative review or inspection under SQMS 1 can lead to mandatory re-inspections, corrective action plans, and potentially – if repeated deficiencies occur – disciplinary proceedings initiated by the relevant state boards or regulatory authorities. No CPA firm wants to find itself defending its practices before a disciplinary body, obviously. However, to avoid this type of outcome requires a significant shift in awareness and proactive preparation – from a majority of US accounting firms.

What should you, a CPA firm, do now?

Implementing SQMS 1 requires a structured yet practical approach. Here are the key steps to guide your firm through the process:

1. Define quality objectives

Use the six SQMS 1 components (as outlined above) as a starting point. Identify what your firm wants to achieve in terms of quality. SQMS 1 has established several clear quality objectives. Your firm can adopt these directly or formulate additional, customized objectives that align with your specific needs and practice areas. 

2. Identify risks

Don't think in general terms, but in practical scenarios instead: where are the risks within your own assignments, client portfolio, and within the team? 

3. Determine control measures

Choose measures that truly address identified risks. Think of training programs, structured team meetings, engagement reviews, or software support. Clearly assign responsibility for implementing each measure.

4. Make it tangible and demonstrable

Avoid creating superficial policies that have no practical application. Instead, implement clear, workable procedures supported by strong documentation and a management system in which you can easily identify, evaluate, and adjust.

5. Work together

Don’t make the implementation of SQMS 1 a solitary exercise. Engage associates, managers, directors, partners, and quality control personnel. SQMS 1 isn’t meant to be just another policy document – it must actively guide everyday practice.

WoodWing Scienta offers guidance

Many CPA firms don't know where to start – understandably so. The amount of information, the legal terminology, and the translation of requirements into practical steps – it is a lot. WoodWing Scienta addresses these concerns by providing ready-to-use content (risks, measures, instructions, models) specifically tailored to the needs of CPA firms navigating the new SQMS 1 standard. Once implemented, firms have immediate access to a structured, operational quality management system.

WoodWing Scienta helps to digitally secure and maintain this quality structure by:

Our advice: start preparing for SQMS 1 today!

For most CPA firms in the United States, SQMS 1 must be fully implemented by December 15, 2025. Delaying until the last moment is simply no longer an option..

Make sure you build a good foundation. Choose an approach that is practical, embraced by your team and the organization, and genuinely supports quality in your firm. Because ultimately, that is what it is all about: doing what is necessary to make quality measurable and tangible in your organization.

Reinvent the wheel? No need, the solution's here!

The introduction of SQMS 1 doesn’t mean your firm has to navigate this alone. WoodWing Scienta has already laid the groundwork for you. Scienta provides clearly defined quality objectives, identified risks, and practical control measures – fully aligned with SQMS 1 standards. In Scienta, you simply link these to the processes, documents, responsibilities, and evaluations that characterize your organization.

Curious to see what that looks like? 
Request a demo to see how your firm can efficiently and transparently implement SQMS 1. Or contact us directly – we'd love to show you how Scienta can help your organization succeed.