Page 10 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
Elements: The firm’s system of quality control should include policies and procedures addressing each of the
following elements: -
(a) Leadership responsibilities for quality within the firm
(b) Ethical requirements
(c) Acceptance and continuance of client relationships and specific engagements
(d) Human resources
(e) Engagement performance
(f) Monitoring

Documentation: Quality control policies and procedures should be documented and communicated to the
firm's personnel.
Feedback & Communication: The firm recognizes the importance of obtaining feedback on its quality
control system from its personnel and encourages them to communicate their views or concerns on quality
control matters.

(CNO-SQC.080) -- Leadership Responsibilities for Quality within the Firm
1. Culture: SQC 1 mandates firms to establish policies and procedures that promote a culture recognizing
quality as essential in performing engagements. The firm's leadership should set an example that encourages
high-quality audit work.
2. Responsibility: The firm's CEO or managing partners should assume ultimate responsibility for the firm's
quality control system. Those assigned operational responsibilities should have the necessary experience, ability,
and authority.
3A. Priority: The firm's business strategy should prioritize achieving quality in all engagements. Audit quality
is paramount and non-negotiable.
3B. Management & Policies: The firm should assign its management responsibilities in a way that
commercial considerations do not override the quality of work performed. The firm's policies and procedures
regarding performance evaluation, compensation, and promotion should demonstrate the firm's overriding
commitment to quality.
3C. Resources: The firm should devote sufficient resources for the development, documentation, and support
of its quality control policies and procedures.

(CNO-SQC.100) Ethical Requirements

1. Policies & Procedures for Ethical Compliance: The firm should establish policies and procedures to
ensure compliance with the Code of Ethics issued by ICAI.
2. Fundamental Principles: The Code outlines key principles of professional ethics including integrity,
objectivity, professional competence, due care, confidentiality and professional behaviour. These principles
should be emphasized through leadership actions, awareness and training, monitoring, and a process for
dealing with non-compliance.
3A. Independence: The firm should maintain independence in all assurance engagements as per the Code.
Policies and procedures should be in place to communicate independence requirements, identify and evaluate
threats to independence, and take appropriate action.
3B. Mechanism for Information Sharing: A mechanism should exist for engagement partners to provide
relevant information about client engagements and for personnel to notify the firm of threats to
independence.
3C. Annual Confirmation: The firm should obtain annual written confirmation of compliance with its
independence policies and procedures from all relevant personnel.

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