EQCM Review Memo Template: SQM1 Engagement Quality Control Review

Published: April 6, 2026 | Category: Template | Read Time: 5 minutes | Author: CORAA Team

How to Use This Template

This EQCM memo template is designed for use per SQM1 requirements. The independent EQCM partner completes this memo before engagement conclusion (pre-completion).

Key Points:

• Independent partner review only (not engagement partner)
• Completed before audit report is signed
• Covers significant judgments, independence, fraud risk, disclosures
• File copy in audit working papers

EQCM Review Memo Template

═══════════════════════════════════════════════════════════════
        ENGAGEMENT QUALITY CONTROL REVIEW MEMO (SQM1)
═══════════════════════════════════════════════════════════════

CLIENT NAME:                    [Client name]
ENGAGEMENT YEAR:               [Year ended: Dec 31, 202X]
ENGAGEMENT PARTNER:            [Engagement partner name]
EQCM REVIEWER:                 [Independent partner name]
REVIEW DATE:                   [Date]
PRELIMINARY / FINAL:           ☐ Preliminary  ☐ Final

═══════════════════════════════════════════════════════════════

SECTION 1: SIGNIFICANT JUDGMENTS REVIEW

Objective: Verify that auditor's judgments on significant matters
are reasonable and supported by sufficient evidence.

─────────────────────────────────────────────────────────────

1.1 REVENUE RECOGNITION
   ☐ NA (not applicable)
   ☐ Simple (standard transactions; low complexity)
   ☐ Complex (multiple performance obligations, unusual terms)

   If Complex:
   - Revenue recognition policy reviewed? ☐ Yes ☐ No
   - Key judgments documented? ☐ Yes ☐ No
   - Supporting evidence adequate? ☐ Yes ☐ No
   - Comments: [Describe any issues or concerns]

   EQCM Conclusion: ☐ Acceptable ☐ Issues identified (see below)

─────────────────────────────────────────────────────────────

1.2 LEASE ACCOUNTING (Ind AS 116)
   ☐ NA (no material leases)
   ☐ Simple (standard operating leases)
   ☐ Complex (multiple leases, modifications, terminations)

   If Complex:
   - Lease identification procedures performed? ☐ Yes ☐ No
   - ROU calculations independently verified? ☐ Yes ☐ No
   - Discount rate selection reasonable? ☐ Yes ☐ No
   - Comments: [Describe any issues or concerns]

   EQCM Conclusion: ☐ Acceptable ☐ Issues identified (see below)

─────────────────────────────────────────────────────────────

1.3 RELATED PARTY TRANSACTIONS (Ind AS 24)
   ☐ NA (no related party transactions)
   ☐ Simple (routine transactions; few RPs)
   ☐ Complex (multiple RPs, significant transactions, non-arm's length)

   If Complex:
   - RP identification comprehensive? ☐ Yes ☐ No
   - Arm's length testing performed? ☐ Yes ☐ No
   - Board approvals evidenced? ☐ Yes ☐ No
   - Disclosures complete? ☐ Yes ☐ No
   - Comments: [Describe any issues or concerns]

   EQCM Conclusion: ☐ Acceptable ☐ Issues identified (see below)

─────────────────────────────────────────────────────────────

1.4 PROVISIONS & CONTINGENCIES (Ind AS 37)
   ☐ NA (no significant provisions)
   ☐ Simple (routine provisions)
   ☐ Complex (litigation, warranties, restructuring)

   If Complex:
   - Contingencies identified? ☐ Yes ☐ No
   - Legal confirmations obtained? ☐ Yes ☐ No
   - Estimates reasonable? ☐ Yes ☐ No
   - Disclosures complete? ☐ Yes ☐ No
   - Comments: [Describe any issues or concerns]

   EQCM Conclusion: ☐ Acceptable ☐ Issues identified (see below)

─────────────────────────────────────────────────────────────

1.5 OTHER SIGNIFICANT JUDGMENTS
   [Identify any other significant audit judgments]

   Judgment 1: [Description]
   - Supporting evidence adequate? ☐ Yes ☐ No
   - Comment: [If "No", describe issue]

   Judgment 2: [Description]
   - Supporting evidence adequate? ☐ Yes ☐ No
   - Comment: [If "No", describe issue]

   EQCM Conclusion: ☐ Acceptable ☐ Issues identified (see below)

═══════════════════════════════════════════════════════════════

SECTION 2: INDEPENDENCE & RELATED PARTY SCREENING

Objective: Confirm no audit team member has independence
impairments or related party status.

─────────────────────────────────────────────────────────────

2.1 AUDIT TEAM INDEPENDENCE CONFIRMATION

   ☐ Engagement Partner: No independence impairments confirmed
   ☐ Manager: No independence impairments confirmed
   ☐ Seniors: No independence impairments confirmed
   ☐ Juniors: No independence impairments confirmed

   Specific Confirmations:
   ☐ No audit team member is related party (Ind AS 24)
   ☐ No financial interest in client (direct or indirect)
   ☐ No long association (>7 years without rotation)
   ☐ No management threat (no former management)
   ☐ No business relationship
   ☐ No family relationships among team/client management

   EQCM Conclusion: ☐ Independence confirmed ☐ Issues identified

   If Issues Identified:
   - Issue: [Describe independence impairment]
   - Resolution: [How was impairment resolved?]
   - Documentation: ☐ In file

─────────────────────────────────────────────────────────────

2.2 CLIENT CONTINUANCE ASSESSMENT

   Continuance Re-Assessment Performed? ☐ Yes ☐ No

   If Yes:
   ☐ Client acceptable (no major red flags)
   ☐ No significant fraud indicators
   ☐ No money laundering/sanctions concerns
   ☐ No regulatory issues

   EQCM Conclusion: ☐ Continuance acceptable ☐ Discuss with partner

═══════════════════════════════════════════════════════════════

SECTION 3: FRAUD RISK & GOING CONCERN

Objective: Verify auditor performed appropriate procedures on
fraud risk and going concern.

─────────────────────────────────────────────────────────────

3.1 FRAUD RISK PROCEDURES

   ☐ Management override procedures performed
   ☐ Fraud risk factors assessed
   ☐ High-risk areas tested (revenue, cash, RP)
   ☐ Unusual transactions investigated

   EQCM Conclusion: ☐ Appropriate ☐ Insufficient procedures

─────────────────────────────────────────────────────────────

3.2 GOING CONCERN ASSESSMENT

   ☐ NA (going concern not an issue)
   ☐ Going concern assessment performed
   ☐ Management's assessment reviewed
   ☐ Adequacy of disclosure evaluated

   If Going Concern Issue Identified:
   - Issue: [Describe]
   - Auditor assessment: [Conclusion]
   - Disclosure: ☐ Adequate ☐ Inadequate

   EQCM Conclusion: ☐ Appropriate ☐ Concerns remain

═══════════════════════════════════════════════════════════════

SECTION 4: FINANCIAL STATEMENT DISCLOSURES

Objective: Verify all required disclosures are complete and
accurate in financial statements.

─────────────────────────────────────────────────────────────

4.1 MANDATORY DISCLOSURES CHECKLIST

   ☐ Related party disclosures complete (Ind AS 24)
   ☐ Contingencies disclosed (Ind AS 37)
   ☐ Lease disclosures complete (Ind AS 116)
   ☐ Revenue policy disclosed (Ind AS 115)
   ☐ Key management compensation disclosed
   ☐ Segment reporting (if applicable)
   ☐ Events after balance sheet date

   Any Missing? ☐ No  ☐ Yes (describe: ___________________)

─────────────────────────────────────────────────────────────

4.2 DISCLOSURE ACCURACY VERIFICATION

   ☐ RP disclosures reconcile to GL
   ☐ RP transaction amounts accurate
   ☐ Lease liability amounts accurate
   ☐ No contradictions between disclosures

   Issues Identified? ☐ No  ☐ Yes (describe: ___________________)

─────────────────────────────────────────────────────────────

4.3 LISTED COMPANY REQUIREMENTS (if applicable)

   ☐ NA (unlisted company)
   ☐ Form AOC-2 properly prepared
   ☐ Board Report includes RP summary
   ☐ Related party policy disclosed

   EQCM Conclusion: ☐ Compliant ☐ Issues identified

═══════════════════════════════════════════════════════════════

SECTION 5: AUDIT FILE DOCUMENTATION

Objective: Verify audit file is complete and organized per
firm standards.

─────────────────────────────────────────────────────────────

5.1 REQUIRED DOCUMENTATION PRESENT

   ☐ Audit plan & risk assessment
   ☐ Significant judgments memo
   ☐ RP identification & testing summary
   ☐ Going concern assessment (if applicable)
   ☐ Fraud risk procedures
   ☐ GL testing summary (100% scan or sample)
   ☐ Revenue/lease/RP testing workpapers
   ☐ Year-end reconciliations
   ☐ Disclosure review checklist
   ☐ Matters for discussion with management/audit committee

   Any Missing? ☐ No  ☐ Yes (list: ___________________)

─────────────────────────────────────────────────────────────

5.2 WORKPAPER QUALITY

   ☐ Workpapers clearly indexed
   ☐ Conclusions documented for each area
   ☐ Significant findings escalated
   ☐ Partner initials & dates present

   Quality Issues? ☐ No  ☐ Yes (describe: ___________________)

═══════════════════════════════════════════════════════════════

SECTION 6: OVERALL EQCM CONCLUSION

─────────────────────────────────────────────────────────────

6.1 OVERALL ASSESSMENT

   Select One:

   ☐ AUDIT READY FOR REPORT
      All significant judgments are reasonable and supported.
      Independence confirmed. Disclosures complete.
      No material issues identified.
      Audit file is ready for signing.

   ☐ ISSUES IDENTIFIED - DISCUSSION REQUIRED
      [See specific sections above for issues]
      Remediation steps required before audit conclusion.

   ☐ SIGNIFICANT CONCERNS - ESCALATE
      [Describe concern requiring escalation to quality committee]

─────────────────────────────────────────────────────────────

6.2 EQCM REVIEWER SIGN-OFF

   EQCM Reviewer Name: _________________________________

   EQCM Reviewer Signature: ___________________________

   Date: _______________________________________________

   RP Initials: ______  Date: ________

─────────────────────────────────────────────────────────────

6.3 IF ISSUES IDENTIFIED: REMEDIATION ACTIONS

   Issue #1: [Description]
   - Action Required: [What needs to be done?]
   - Responsible Party: [Who will do this?]
   - Target Date: [By when?]
   - Status: ☐ Open  ☐ Complete

   Issue #2: [Description]
   - Action Required: [What needs to be done?]
   - Responsible Party: [Who will do this?]
   - Target Date: [By when?]
   - Status: ☐ Open  ☐ Complete

   [Add more as needed]

   REMEDIATION SIGN-OFF:
   All issues remediated? ☐ Yes  ☐ No
   Final Approval: ________________  Date: _________

═══════════════════════════════════════════════════════════════

END OF EQCM MEMO

Key Points for EQCM Reviewers

1. Independence First: Always confirm no audit team member has independence impairments before reviewing substantive procedures.

2. Significant Judgments Focus: EQCM is about verifying that the auditor's judgments on revenue, leases, RP, provisions are reasonable and supported.

3. Pre-Completion Timing: Complete EQCM before the audit report is signed. Do not delay to after engagement conclusion.

4. Disclosures are Critical: Verify that all related party, contingency, and lease disclosures are complete and accurate. Disclosure errors are common NFRA findings.

5. Documentation: File this memo in audit working papers. It's evidence of EQCM performance per SQM1.

Related Resources

• SQM1 & EQCM FAQs: Transition, Requirements & Documentation
• ISA 220 vs. SQM1: Transition Guide for Indian Auditors
• SQM1 Implementation Roadmap: ISA 220 to Compliance

About CORAA

CORAA helps Indian audit firms transition to SQM1 compliance. Download templates, implement EQCM procedures, and achieve June 30, 2026 deadline with our SQM1 framework.

Learn more: Visit our website

Sources

• ISA 220: Quality Management in Audits of Financial Statements
• SQM1: Service Quality Management (ICAI)
• ICAI Quality Standards Implementation Guidance