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

In a complex audit of Rohini Infra Ltd, engagement partner CA Verma argues that because an engagement quality control review is being carried out by CA Iyer, Verma's own responsibility for the audit opinion is lower and CA Iyer should read all working papers in full. Which view is consistent with SQC 1?

Verma is wrong on both points. SQC 1 says the review does not reduce the engagement partner's responsibilities, and the reviewer examines selected working papers on significant judgments, with the extent depending on engagement complexity and the risk that the report may be inappropriate.

  1. AVerma is right on both counts, since the review shifts responsibility to the reviewer
  2. BVerma is wrong on both counts: the review does not reduce the partner's responsibilities, and it involves a review of selected working papers on significant judgments, with extent depending on complexity and riskCorrect
  3. CVerma is right on responsibility but wrong on working papers
  4. DVerma is wrong on responsibility but right that all working papers must be read

Explanation

SQC 1 states that the review does not reduce the responsibilities of the engagement partner. It ordinarily includes discussion with the partner, review of the financial statements and report, and review of selected working papers relating to significant judgments. Extent depends on complexity and risk of an inappropriate report, not a full read of all papers.

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