ACCA Strategic Professional · Advanced Audit and Assurance (International) · International regulatory frameworks for audit and assurance services
Karim & Partners is auditing Delmar Plc, a listed entity, and the firm's policies require an engagement quality review. Which of the following would most clearly breach ISQM 2 requirements on the engagement quality reviewer (EQR)?
Appointing the former engagement partner as EQR immediately after stepping down breaches ISQM 2, which requires a cooling-off period, normally at least two years, before the individual can serve as EQR on that engagement. This protects the reviewer's objectivity and prevents self-review.
- AThe EQR was the engagement partner on the Delmar audit until the prior year and is appointed immediately after stepping down, without a cooling-off periodCorrect
- BThe EQR is a partner with appropriate competence and authority and is not part of the engagement team
- CThe EQR evaluates significant judgements made by the engagement team and the conclusions reached
- DThe EQR completes the review before the engagement report is dated
Explanation
ISQM 2 requires the firm to set a cooling-off period (at least two years unless local requirements are stricter) before the former engagement partner can act as EQR on that engagement. Immediate appointment breaches this. The other options describe proper practice: competence and objectivity, review of significant judgements, and completion before report date.
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