Page 16 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
monitoring and preserving auditor independence.
3. SA 220 Implements SQC 1: SA-220 is based on the understanding that the firm complies with SQC 1,
reinforcing the firm's commitment to maintain a high-quality audit. The engagement teams can depend on the
firm's quality control system, except when contrary information is provided by the firm or other parties.

(CNO-SA 220.040) Objectives of SA 220

As per SA-220, the objective of the auditor is to implement quality control procedures at the engagement
level that provide the auditor with reasonable assurance that: -
(a) The audit complies with professional standards and regulatory and legal requirements and
(b) The auditor’s report issued is appropriate in the circumstances.
SA-220 is modelled on lines of SQC 1. It describes responsibilities of engagement partner in relation to
following matters: -
(a) Leadership responsibilities for quality on audits.
(b) Relevant ethical requirements.
(c) Acceptance and continuance of client relationships and audit engagements.
(d) Assignment of engagement teams (Human Resources)
(e) Engagement performance.
(f) Monitoring.

(CNO-SA 220.060) Leadership Responsibilities for Quality on Audits

1A. Quality Priority: Quality is not just an aspect but the essence of performing audit engagements. The
engagement partner must emphasize this fact to the team, ensuring that quality is at the forefront of all audit
activities.
1B. Quality Control Systems: The engagement partner is obligated to follow the firm's quality control
policies and procedures. This adherence ensures consistency and reliability in the audit process.
2A. Compliance: The engagement partner must ensure that all work performed adheres to professional
standards, regulatory requirements, and legal obligations. This is crucial to maintaining audit quality.
2B. Reporting: The engagement partner plays a significant role in issuing auditor's reports that are appropriate
given the specific circumstances. This responsibility ensures that the audit findings are communicated
effectively and accurately.
3. Open Communication: It's important for the engagement team to feel safe in raising concerns without fear
of reprisals. The engagement partner must foster an environment that encourages open dialogue and
transparency.

(CNO-SA 220.080) Relevant Ethical Requirements

Threat Identification: Engagement partners must identify threats to their independence in the audit
engagement. If safeguards are insufficient to reduce these threats, further action is necessary.
Internal Reporting: Engagement partners should report identified threats to relevant individuals within their
firm. The aim is to determine actions, such as eliminating the threat or legally withdrawing from the
engagement.

(CNO-SA 220.100) Acceptance and Continuance of Client Relationships and Audit Engagements

1. Obtain Information: Obtain necessary information before accepting or continuing engagements. Use
gathered information to determine if conclusions regarding client relationships and audit engagements are
appropriate.
2A. Integrity: Assess integrity of principal owners.
3A. Competence: Assess competence of engagement team, and necessary capabilities.

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