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CA Final · Advanced Auditing, Assurance and Professional Ethics · Related Services

CA Anil's firm has completed a compilation engagement for Lotus Retail Ltd, and the firm's partners are debating how SQC 1 relates to such engagements. Which statement is correct under SRS 4410 (Revised)?

SQC 1 deals with the firm's responsibilities to establish and maintain its system of quality control for related services engagements, including compilation engagements. It is directed at the firm's quality control system, its policies and the procedures to implement and monitor compliance. It is not limited to audits or listed entities.

  1. ASQC 1 applies only to audit engagements, so compilation engagements need no firm-level quality control
  2. BSQC 1 deals with the firm's responsibilities to establish and maintain its system of quality control for related services engagements, including compilation engagementsCorrect
  3. CSQC 1 replaces the practitioner's report requirements in SRS 4410 (Revised)
  4. DSQC 1 applies to compilations only when the entity is a listed company

Explanation

SRS 4410 (Revised) states that SQC 1 deals with the firm's responsibilities to establish and maintain its system of quality control for related services engagements, including compilation engagements. The responsibilities are directed at the firm's quality control system and its related policies, procedures to implement them and monitoring of compliance. The other options contradict this text or add conditions not found in it.

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