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

For a statutory audit, Gupta & Co appoints Anil as engagement quality control reviewer. Anil is not selected by the engagement partner, but midway he is asked to settle a disputed inventory valuation for the engagement team and to decide the sampling approach. He also completes his review after the report is signed. Which statement best identifies the departures from SQC 1?

Both are departures. The reviewer must not make decisions for the engagement team, since that impairs objectivity, and the review must be completed before the report is issued, with this documented. Not being chosen by the engagement partner satisfies only one safeguard.

  1. AOnly the post-report review is a departure; making decisions for the team is acceptable
  2. BMaking decisions for the engagement team threatens objectivity, and the review must be completed before the report is issuedCorrect
  3. COnly making decisions is a departure; timing of the review is a firm's choice
  4. DThere is no departure, because Anil was not selected by the engagement partner

Explanation

The reviewer must not make decisions for the engagement team or participate in the engagement during the review period. Further, the review must be completed before the report is issued, with documentation of this. Not being selected by the partner satisfies only one safeguard.

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