Page 14 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

(CNO-SQC.320) Engagement Quality Control Review for Audit of Listed Entities.
An engagement quality control review for audits of financial statements of listed entities includes
considering the following: -
1. Independence: Evaluation of the audit firm's independence concerning the specific engagement.
2. Significant risks: Identification of significant risks during the engagement and the corresponding
responses.
3. Significant Judgment and Consultation: Review of crucial judgments made, particularly around
materiality and significant risks, and consultations on contentious matters.
5. Misstatements: Scrutiny of corrected and uncorrected misstatements identified during the engagement and
their resolution.
6. Communication and Documentation: Analysis of the matters to be communicated to management,
governance, and regulators; review of working papers supporting significant judgments and conclusions; and
verification of the appropriateness of the audit report.

(CNO-SQC.340) Who can become Engagement Quality Control Reviewer?

Not a Team Member & No Participation:
The engagement quality control reviewer should be a qualified external individual, such as a partner or
employee who is a member of ICAI, or someone from another firm with a similar background.
The reviewer must maintain objectivity and should not participate in the engagement or make decisions for
the engagement team.
Consultation: The engagement partner can consult the reviewer during the engagement, provided it does not
compromise the reviewer's objectivity and eligibility.
Substitution: If the consultations become significant and objectivity cannot be maintained, another individual
within the firm or a qualified external person should be appointed as either the engagement quality control
reviewer or the person to be consulted on the engagement.
The firm's policies should include provisions for replacing the engagement quality control reviewer if their
ability to perform an objective review is compromised.

(CNO-SQC.345) Essential Documentation Requirements for Engagement Quality Control Reviews

1. Compliance: The firm's policies on engagement quality control review have been adhered to.
2A. Appropriateness: The judgments made, and conclusions reached by the engagement team are deemed
suitable.
2B. No unresolved matters: There are no unresolved matters that could lead the reviewer to question the
judgments and conclusions of the engagement team.
2C. Completion: The engagement quality control review has been finalized prior to the issuance of the report.
3. Documentation: All the above points are well-documented as per the firm's policies and procedures.

(CNO-SQC.360) Differences of Opinion:

1. Differences: Differences of opinion can occur within the engagement team, with consulted individuals, and
between the engagement partner and the engagement quality control reviewer.
2A. Report Issuance: The report should not be issued until all such differences are resolved.
2B. Resolution Procedures: The matter should be addressed following the firm's established procedures.
These procedures may involve consulting with another practitioner or firm, or a professional or regulatory
body.
3. Quality Assurance: Adherence to these procedures is crucial to ensure the highest quality and accuracy of
the engagement process and the resulting report.

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