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

During an audit by Nair & Co, the engagement partner frequently consults the designated engagement quality control reviewer on a technical accounting issue. The consultations have now become significant in nature and extent. What does SQC 1 expect the firm to do if objectivity cannot be maintained?

Where consultations become significant and objectivity cannot be preserved, the firm appoints another individual within the firm or a suitably qualified external person to act either as the reviewer or as the person consulted. Consultation alone does not disqualify, but significant consultation needs safeguards.

  1. AContinue, since consultation never affects eligibility
  2. BAppoint another individual in the firm or a suitably qualified external person as reviewer or as the person consultedCorrect
  3. CCancel the review and issue the report without it
  4. DAsk the client management to certify that the reviewer is objective

Explanation

Consultation need not compromise eligibility, but where it becomes significant, both sides must take care to maintain objectivity. If that is not possible, another individual in the firm or a suitably qualified external person is appointed as reviewer or as the person to be consulted.

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