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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Other current issues

Brightwell & Co has several audit clients. Which engagement must the firm, under ISQM 1, subject to an engagement quality review?

ISQM 1 requires an engagement quality review for audits of listed entities, for engagements where law or regulation requires one, and for any engagement where the firm decides a review is an appropriate response to assessed quality risks. It is not limited to modified reports or past inspection findings.

  1. AEvery audit of a company with turnover above a threshold set by the engagement partner
  2. BThe audit of a listed entity, and any engagement for which the firm determines a review is an appropriate response to assessed quality risksCorrect
  3. COnly engagements where a previous inspection found significant deficiencies
  4. DOnly audits where the audit report is expected to be modified

Explanation

ISQM 1 requires an engagement quality review for audits of financial statements of listed entities, for engagements required by law or regulation, and for engagements where the firm determines a review is an appropriate response to quality risks. The other options set criteria that ISQM 1 does not prescribe.

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