CA Final · Advanced Auditing, Assurance and Professional Ethics · Related Services
CA Firm Desai & Co. is engaged to compile a schedule of inventory values that Orchid Pharma Ltd must file under a regulator's prescribed format. The firm's partner asks which standard governs the firm's own internal policies for such engagements and what the report should say about the framework. Which answer is correct?
SQC 1 applies to the firm's quality control system for compilation engagements. The report is addressed to management, states that the schedule is prepared on the regulator-prescribed basis, expresses no audit opinion or review conclusion, and restricts distribution to the intended users.
- ASQC 1 governs the firm's quality control system for related services engagements including compilations, and the report is addressed to management and says the schedule is prepared on the basis prescribed by the regulation, with distribution restricted to the intended usersCorrect
- BSQC 1 does not apply to compilations, and the report must express an audit opinion on compliance with the regulator's format
- CSQC 1 applies only to audits, and the report may be distributed to the public
- DSQC 1 applies, but the report must state that the practitioner verified the accuracy and completeness of the information
Explanation
SRS 4410 (Revised) says SQC 1 deals with the firm's responsibility to maintain a quality control system for related services engagements including compilations. Illustration 5 shows a report to management saying the schedule is prepared on the basis prescribed by the regulation, with distribution restricted to the intended users. The verification option is wrong because a compilation is not an assurance engagement and the practitioner is not required to verify the information.
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