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CS Professional · Compliance Management, Audit and Due Diligence · Peer Review and Quality Review

CS Ravi Nair, engagement partner on an audit, argues that because an independent reviewer has examined the file, his own responsibility for the audit report is now shared with the reviewer. What is the correct position under SQC 1?

The engagement partner stays fully responsible. SQC 1 says the engagement quality control review does not reduce the engagement partner's responsibilities; it only provides an objective evaluation of the team's significant judgments and conclusions.

  1. AResponsibility shifts fully to the reviewer after the review
  2. BResponsibility is divided equally between the partner and the reviewer
  3. CThe review does not reduce the responsibilities of the engagement partnerCorrect
  4. DResponsibility passes to the firm's managing partner

Explanation

SQC 1 states that the engagement quality control review does not reduce the responsibilities of the engagement partner. The review is an objective evaluation of significant judgments, involving discussion with the partner and a review of selected working papers, not a transfer of accountability.

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