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

Before issuing the report on a listed client, Desai & Co. completed the engagement quality control review. The reviewer's file note says only: 'Review done, all fine.' The firm's policy requires documentation as per SQC 1. Which set of matters must the documentation of the review cover?

The documentation must show that the firm's required review procedures were performed, that the review was completed before the report was issued, and that the reviewer knows of no unresolved matters suggesting the team's significant judgments and conclusions were inappropriate. A bare 'all fine' note is insufficient.

  1. AOnly the date on which the engagement partner signed the report
  2. BThe reviewer's fee and the number of hours spent on the review
  3. CProcedures required by firm policy were performed, review was completed before the report was issued, and the reviewer is not aware of unresolved matters suggesting the significant judgments and conclusions were inappropriateCorrect
  4. DA copy of the client's management representation letter and the final financial statements

Explanation

SQC 1 requires documentation that (a) the procedures required by the firm's policies on the review were performed, (b) the review was completed before the report was issued, and (c) the reviewer is not aware of any unresolved matters that would cause the reviewer to believe the significant judgments and conclusions were not appropriate. A bare note does not evidence these three items. Fees and hours are not part of the stated requirement.

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