Page 19 - CA Final PARAM Digital Book.

Responsibility of EP after EQCR & Aspects to be considered by Old Course – (M22E)
QNO
5.005 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.
7. Whether working papers selected for review reflect the work performed in relation to the significant
judgments and support the conclusions reached.
8. The appropriateness of the report to be issued.
Engagement quality control reviews for engagements other than audits of financial statements of listed
entities may, depending on the circumstances, include some or all of these considerations.

QNO Date of Signing, Only After Date of Completion of EQCR Old Course-(N18M,M19M)
5.010 TITANIUM CNO -- SA220.160
OP & Associates are the statutory auditors of BB Ltd. BB Ltd is a listed company and started its operations
5 years back. The field work during the audit of the financial statements of the company for the year ended
March 31, 2018 got completed on May 1, 2018. The auditor’s report was dated May 12, 2018. During the

documentation review of the engagement, it was observed that the engagement quality control review was
completed on May 15, 2018. The engagement partner had completed his reviews in entirety by May 10,
2018. Comment.
Answer Responsibility of Engagement Partner:
As per SA 220, “Quality Control for an Audit of Financial Statements”, the engagement partner shall take
responsibility for reviews being performed in accordance with the firm’s review policies and procedures.
For audits of financial statements of listed entities, the engagement partner shall:
➢ Determine that an engagement quality control reviewer has been appointed.
➢ Discuss significant matters arising during the audit engagement, including those identified during
the engagement quality control review, with the engagement quality control reviewer; and
➢ Not date the auditor’s report until the completion of the engagement quality control review.

SA 700, “Forming an Opinion and Reporting on Financial Statements”, requires
The auditor’s report to be dated no earlier than the date on which the auditor has obtained sufficient
appropriate evidence on which to base the auditor’s opinion on the financial statements. In cases of an audit
of financial statements of listed entities where the engagement meets the criteria for an engagement quality
control review, such a review assists the auditor in determining whether sufficient appropriate evidence has
been obtained.

www.auditguru.in PARAM 1.12 | P a g e