Engagement Quality Control Review
(Following draft may be used as an example for process of EQCR)
- Purpose:
- To document the time spent on review by the engagement quality control reviewer (‘EQCR’) and review comments and their disposal by the engagement team.
- Timing of Review:
Review with EQCR was scheduled on Date i.e. on Monday in the Delhi Office of ABC.
C. System of Quality Control and Role of Engagement Teams
- Quality control systems, policies and procedures are the responsibility of the audit firm. Under SQC 1, the firm has an obligation to establish and maintain a system of quality control to provide it with reasonable assurance that:
- The firm and its personnel comply with professional standards and regulatory and legal requirements; and
- The reports issued by the firm or engagement partners are appropriate in the circumstances.
- Within the context of the firm’s system of quality control, engagement teams have a responsibility to implement quality control procedures that are applicable to the audit engagement and provide the firm with relevant information to enable the functioning of that part of the firm’s system of quality control relating to independence.
Engagement teams are entitled to rely on the firm’s system of quality control, unless information provided by the firm or other parties suggests otherwise.
Policies and procedures on documentation of the engagement quality control review should require documentation that:
- (a) The procedures required by the firm’s policies on engagement quality control review have been performed;
- (b) The engagement quality control review has been completed before the report is issued; and
- (c) The reviewer is not aware of any unresolved matters that would cause the reviewer to believe that the significant judgments the engagement team made and the conclusions they reached were not appropriate.
Leadership Responsibilities for Quality on Audits
3. The engagement partner shall take responsibility for the overall quality on each audit engagement to which that partner is assigned.
Relevant Ethical Requirements
4. Throughout the audit engagement, the engagement partner shall remain alert, through observation and making inquiries as necessary, for evidence of non-compliance with relevant ethical requirements by members of the engagement team.
5. If matters come to the engagement partner’s attention through the firm’s system of quality control or otherwise that indicate that members of the engagement team have not complied with relevant ethical requirements, the engagement partner, in consultation with others in the firm, shall determine the appropriate action.
Independence
- 6. The engagement partner shall form a conclusion on compliance with independence requirements that apply to the audit engagement. In doing so, the engagement partner shall:
- Obtain relevant information from the firm and, where applicable, network firms, to identify and evaluate circumstances and relationships that create threats to independence;
- Evaluate information on identified breaches, if any, of the firm’s independence policies and procedures to determine whether they create a threat to independence for the audit engagement; and
- Take appropriate action to eliminate such threats or reduce them to an acceptable level by applying safeguards, or, if considered appropriate, to withdraw from the audit engagement, where withdrawal is permitted by law or regulation. The engagement partner shall promptly report to the firm any inability to resolve the matter for appropriate action.
Acceptance and Continuance of Client Relationships and Audit Engagements
7. The engagement partner shall be satisfied that appropriate procedures regarding the acceptance and continuance of client relationships and audit engagements have been followed, and shall determine that conclusions reached in this regard are appropriate.
8. If the engagement partner obtains information that would have caused the firm to decline the audit engagement had that information been available earlier, the engagement partner shall communicate that information promptly to the firm, so that the firm and the engagement partner can take the necessary action.
Assignment of Engagement Teams
9. The engagement partner shall be satisfied that the engagement team, and any auditor’s experts who are not part of the engagement team, collectively have the appropriate competence and capabilities to:
- Perform the audit engagement in accordance with professional standards and regulatory and legal requirements; and
- Enable an auditor’s report that is appropriate in the circumstances to be issued.
Engagement Performance
Direction, Supervision and Performance
10. The engagement partner shall take responsibility for:
- The direction, supervision and performance of the audit engagement in compliance with professional standards and regulatory and legal requirements; and
- The auditor’s report being appropriate in the circumstances.
