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

Kapoor & Co., a firm of Chartered Accountants, is auditing Vishwas Pharma Pvt Ltd, an unlisted company. The firm's policy lists criteria for choosing engagements needing an engagement quality control review. Which factor is consistent with the criteria in SQC 1 for an unlisted entity's audit?

Identification of unusual circumstances or risks in an engagement is a listed criterion for requiring an engagement quality control review for engagements other than listed-entity audits. Other criteria include public interest nature and legal requirements. Fee increases or partner experience are not the stated criteria.

  1. AThe audit fee exceeds the fee of the previous year
  2. BThe engagement involves unusual circumstances or risksCorrect
  3. CThe engagement partner has fewer than five years of experience
  4. DThe client has more than one bank account

Explanation

SQC 1 lists criteria such as the nature of the engagement including public interest, unusual circumstances or risks, and whether laws or regulations require a review. Fee growth, partner experience and number of bank accounts are not listed criteria.

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