Page 12 - CA Final PARAM Digital Book.

what areas CA. G should consider at the time of review. List any four areas and also comment whether firm
is complying with Standard on Quality Control or not.
Answer As per SQC 1, an engagement quality control review for audits of financial statements of listed entities
includes considering the following:
(i) The work has been performed in accordance with professional standards and
regulatory and legal requirements;
(ii) Significant matters have been raised for further consideration;
(iii) Appropriate consultations have taken place and the resulting conclusions have been
documented and implemented;
(iv) There is a need to revise the nature, timing and extent of work performed;
(v) The work performed supports the conclusions reached and is appropriately
documented;
(vi) The evidence obtained is sufficient and appropriate to support the report; and
(vii) The objectives of the engagement procedures have been achieved.

The firm should establish policies and procedures:
(i) Setting out criteria for determining the need for safeguards to reduce the familiarity
threat to an acceptable level when using the same senior personnel on an assurance
engagement over a long period of time; and
(ii) For all audits of financial statements of listed entities, requiring the rotation of the
engagement partner after a specified period in compliance with the Code.

The familiarity threat is particularly relevant in the context of financial statement audits of listed
entities. For these audits, the engagement partner should be rotated after a predefined period, normally
not more than seven years.

From the facts given in the question and from the above stated paras of SQC 1, it can be concluded that
firm is not complying with SQC 1 as Engagement Partner H is continuing for more than 7 years.

Responsibility of EP after EQCR & Aspects to be considered by Old Course – (M22E)
QNO
127.650 Engagement Quality Control Reviewer
TITANIUM CNO -- SA220.160
PQR & Associates, Chartered Accountants, is a partnership firm having 3 partners CA P, CA Q and CA R.
PQR & Associates are appointed as Statutory Auditors of ABC Limited, a listed entity for the financial year
2021-22 and CA P is appointed as Engagement Partner for the audit of ABC Limited. Before issuing the
Audit Report of ABC Limited, CA P asked CA R to perform Engagement Quality Control Review and is of the
view that his responsibility will be reduced after review by CA R. Whether the contention of CA P is correct?
What are the aspects that need to be considered by CA R while performing Engagement Quality Control
Review for audit of financial statements of ABC Limited?
Answer As per SQC 1, “Quality Control for Firms that Perform Audit and Reviews of Historical Financial
Information, and other Assurance and Related Services Engagements”, the review does not reduce the
responsibilities of the engagement partner. Hence, contention of CA. P that after engagement quality
control review by CA. R, his responsibility will be reduced, is not correct.
However, CA. R needs to consider the following aspect while performing Engagement Quality Control
Review for audit of financial statements of a listed entity ABC Ltd.:
1. The engagement team’s evaluation of the firm’s independence in relation to the specific
engagement.
2. Significant risks identified during the engagement and the responses to those risks.
3. Judgments made, particularly with respect to materiality and significant risks.
4. Whether appropriate consultation has taken place on matters involving differences of opinion or
other difficult or contentious matters, and the conclusions arising from those consultations.
5. The significance and disposition of corrected and uncorrected misstatements identified during the
engagement.
6. The matters to be communicated to management and those charged with governance and, where
applicable, other parties such as regulatory bodies.

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