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CA Final · Advanced Auditing, Assurance and Professional Ethics · Quality Control

A mid-sized firm, Gupta Menon & Co., has documented its quality control policies. A senior manager says it is enough to keep the manual in the partners' office, since staff only need to follow instructions and are not expected to raise concerns. Which view is consistent with SQC 1?

Quality control policies must be documented and communicated to the firm's personnel, including the message that each person is personally responsible for quality and must comply. The firm should also obtain feedback and encourage personnel to share views or concerns on quality control matters.

  1. APolicies need to be communicated only to partners, as they carry the responsibility for quality
  2. BPolicies should be documented and communicated to all personnel, with the message of personal responsibility for quality, and personnel should be encouraged to voice views or concernsCorrect
  3. CDocumentation is needed only for listed entity engagements
  4. DFeedback from personnel is prohibited, as it may compromise the independence of the quality control system

Explanation

SQC 1 states that quality control policies and procedures should be documented and communicated to the firm's personnel, including the message that each individual has personal responsibility for quality. The firm also recognises the importance of feedback and encourages personnel to communicate views or concerns. Option A contradicts this.

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