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CA Final · Advanced Auditing, Assurance and Professional Ethics · Related Services

A CA firm, Iyer & Partners, runs a quality control system under SQC 1 and has accepted several compilation engagements. A junior partner argues that SQC 1 applies only to audits and not to compilation engagements. What is the correct position under SRS 4410 (Revised)?

SQC 1 applies to compilation engagements. SRS 4410 (Revised) states that SQC 1 deals with the firm's responsibilities to establish and maintain its quality control system for related services engagements, including compilation engagements, through policies and procedures to implement and monitor compliance, so the junior partner's view is wrong.

  1. ASQC 1 does not apply to related services engagements
  2. BSQC 1 applies only to assurance engagements, so compilation is exempt
  3. CSQC 1 deals with the firm's responsibilities to establish and maintain its quality control system for related services engagements, including compilation engagementsCorrect
  4. DSQC 1 applies only if the compilation report is distributed to third parties

Explanation

SRS 4410 (Revised) explains that SQC 1 deals with the firm's responsibilities to establish and maintain its system of quality control for related services engagements, including compilation engagements. These responsibilities are directed at establishing the firm's quality control system and related policies, with procedures to implement and monitor compliance. Hence the junior partner's view is incorrect.

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