EQR Review Memo Template: SQM2 Engagement Quality Review
Published: April 6, 2026 | Category: Template | Read Time: 5 minutes | Author: CORAA Team
How to Use This Template
This EQR memo template is designed for use per SQM2 (Engagement Quality Review) requirements, as part of the firm's broader SQM1 system of quality management. The independent Engagement Quality Reviewer 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
EQR Review Memo Template
═══════════════════════════════════════════════════════════════
ENGAGEMENT QUALITY REVIEW MEMO (SQM2)
═══════════════════════════════════════════════════════════════
CLIENT NAME: [Client name]
ENGAGEMENT YEAR: [Year ended: Dec 31, 202X]
ENGAGEMENT PARTNER: [Engagement partner name]
EQR 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]
EQR 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]
EQR 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]
EQR 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]
EQR 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]
EQR 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
EQR 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
EQR 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
EQR 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
EQR 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
EQR 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 EQR 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 EQR REVIEWER SIGN-OFF
EQR Reviewer Name: _________________________________
EQR 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 EQR MEMO
Key Points for EQR Reviewers
-
Independence First: Always confirm no audit team member has independence impairments before reviewing substantive procedures.
-
Significant Judgments Focus: EQR is about verifying that the auditor's judgments on revenue, leases, RP, provisions are reasonable and supported.
-
Pre-Completion Timing: Complete the EQR before the audit report is signed. Do not delay to after engagement conclusion.
-
Disclosures are Critical: Verify that all related party, contingency, and lease disclosures are complete and accurate. Disclosure errors are common NFRA findings.
-
Documentation: File this memo in audit working papers. It's evidence of EQR performance per SQM2.
Related Resources
- SQM1 & EQR FAQs: Transition, Requirements & Documentation
- SQC 1 vs. SQM1: Transition Guide for Indian Auditors
- SQM1 Implementation Roadmap: SQC 1 to SQM1/SQM2 Compliance
About CORAA
CORAA helps Indian audit firms transition to SQM1/SQM2 compliance. Download templates and implement EQR procedures now — ICAI deferred SQM1's mandatory effective date indefinitely in March 2026, but getting documentation in place ahead of the eventual deadline puts your firm ahead.
Learn more: Visit our website
Sources
Topics
EQR templateSQM2 complianceengagement quality reviewindependent reviewaudit checklist