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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Quality management (firm and engagement level)

During the engagement quality review of Orinoco Telecom, the reviewer, Dev, notes that the engagement team concluded a major revenue recognition judgement with little documented support. The auditor's report is ready to be dated. What should Dev do under ISQM 2?

Dev should notify the engagement partner that the report must not be dated until the review is complete. Under ISQM 2 the review is not complete while significant concerns about judgements remain unresolved, so the revenue judgement must first be adequately supported.

  1. ASign off the review, then ask the team to improve the documentation after the report is issued
  2. BAdvise that the report should not be dated until the review is completed, and notify the engagement partner that the concerns must be resolved firstCorrect
  3. CIssue the auditor's report himself because he has identified the issue
  4. DRemove the revenue judgement from the scope of his review since the partner has approved it

Explanation

ISQM 2 requires that the engagement partner not date the auditor's report until the engagement quality review is completed. If the reviewer has concerns that significant judgements or conclusions are not appropriate, the review is not complete until they are resolved. Postponing documentation or narrowing scope is inappropriate.

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