Page 20 - CA Final PARAM Digital Book.

Significant Matters will be promptly resolved.
Conducting the engagement quality control review in a timely manner at appropriate stages during the
engagement allows significant matters to be promptly resolved to the engagement quality control
reviewer’s satisfaction on or before the date of the auditor’s report.

Part III – Facts
➢ In the instant case, OP & Associates are the statutory auditors of a listed company BB Ltd. Which
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.

➢ Thus, in the given case, signing of auditor’s report i.e., on May 12, 2018 which is before the
completion of review engagement quality control review i.e., May 15, 2018, is not in order.

Independence--Responsibility of Partner and EQCR Old Course-(M19R,N19M,SM20,M22R)
QNO
5.020 in listed company New Course-(SM23)
TITANIUM CNO - SA220.160
During the audit of FMP Ltd, a listed company, Engagement Partner (EP) completed his reviews and also
ensured compliance with independence requirements that apply to the audit engagement. The
engagement files were also reviewed by the Engagement Quality Control Reviewer (EQCR) except the
independence assessment documentation. Engagement Partner was of the view that matters related to
independence assessment are the responsibility of the Engagement Partner and not Engagement Quality
Control Reviewer. The Engagement Quality Control Reviewer objected to this and refused to sign off the
documentation. Please advise as per SA 220.
Answer ➢ As per SA 220, Engagement Partner shall form a conclusion on compliance with independence
requirements that apply to the audit engagement. In doing so, 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.

Engagement Partner shall take responsibility for reviews being performed in accordance with the
firm’s review policies and procedures.

As per SA 220, “Quality Control for Audit of Financial Statements”, for audits of financial statements
of listed entities, Engagement Quality Control Reviewer (EQCR), on performing an engagement
quality control review, shall also consider the engagement team’s evaluation of the firm’s
independence in relation to the audit engagement.

In the given case, Engagement Partner is not right. The independence assessment documentation
should also be given to Engagement Quality Control Reviewer for his review.

QNO Not drafting report properly New Course – (SM23)
5.050 Unique
RST & Co., a firm of Chartered accountants, are auditors of a listed company engaged in manufacturing of
heavy machinery components. The audit report for year 2021-22 also included report on matters listed in
CARO,2020. While reporting under clause vii(a) of the said order relating to regularity of undisputed

www.auditguru.in PARAM 1.13 | P a g e