ACCA Strategic Professional · Advanced Audit and Assurance (International) · Quality management (firm and engagement level)
Brightwater & Co is auditing Calder Shipping, a listed entity. The engagement quality reviewer, Anya, is a partner in the firm who was consulted by the engagement team last month on the accounting for a complex vessel impairment. She gave a detailed view that the team adopted. The firm wants her to perform the review. Which statement is most appropriate?
Anya's detailed consultation on a significant judgement creates a self-review threat to her objectivity. Because the team adopted her view, she would be reviewing her own advice, so another reviewer should be appointed. Independence from the client alone does not satisfy the objectivity requirement.
- AShe may act, since consultation is a required quality response and the team simply followed expert advice
- BShe may act only if she documents that her earlier advice was not influential
- CHer involvement as consultee creates a threat to objectivity, and she may act as reviewer only if her consultation was limited in nature and the firm's policies allow it without compromising objectivity; otherwise another reviewer should be appointedCorrect
- DShe may act, because the reviewer need only be independent of the client, not of the engagement team's decisions
Explanation
ISQM 1 requires that the reviewer's objectivity is not impaired. Having been consulted on a significant matter creates a self-review threat, particularly where she gave a detailed view adopted by the team. Her consultation here was substantial, so a different reviewer should be appointed. Independence from the client alone is not sufficient.
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