The purpose of the monitoring process required by ISQM (UK) 1 is to provide a basis for identifying deficiencies in the system of quality management, such that action can be taken to remedy them.

ISQM (UK) 1:38 requires that the monitoring process should include the inspection of completed audits (cold file reviews) and that these should include at least one completed audit for each of the firm’s responsible individuals on ‘a cyclical basis determined by the firm’ – although the standard does not state that this must be an annual cycle, it is likely to be so in many cases.

It is important to note, however, that the monitoring process does not just involve carrying out cold file reviews.