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CS Professional · Compliance Management, Audit and Due Diligence · Peer Review and Quality Review

At Kulkarni Associates, partner Anil handles the audit of a listed client and proposes that his close colleague Sunita act as engagement quality control reviewer, as he trusts her judgment. Under SQC 1, why is this proposal inconsistent with the objectivity safeguards for reviewers?

The proposal conflicts with SQC 1 because the engagement quality control reviewer should not be selected by the engagement partner. This safeguard protects the reviewer's objectivity. The standard does not require the reviewer to be external or to meet arbitrary experience limits.

  1. ABecause the reviewer must always be an external person outside the firm
  2. BBecause the reviewer must have fewer years of experience than the engagement partner
  3. CBecause the reviewer is not to be selected by the engagement partnerCorrect
  4. DBecause the reviewer must be a partner of at least five different firms

Explanation

SQC 1 lists, as an example of maintaining objectivity, that the reviewer is not selected by the engagement partner. The standard does not require an external reviewer, nor set experience caps or multi-firm requirements.

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