ACCA Strategic Professional · Advanced Audit and Assurance (International) · Quality management (firm and engagement level)
Kestrel & Moss is auditing Orlin Holdings, a listed entity. The EQR, Dev Anand, reviewing the file, identifies that the engagement team accepted management's valuation of a significant intangible asset with limited challenge, and that the team consulted a firm specialist whose advice was not followed and whose disagreement is not documented. The partner says the matter is resolved. What should Dev do under ISQM 2?
Dev should raise his concerns with the engagement partner, and if they stay unresolved, notify an appropriate person in the firm. The review is then not concluded and the report cannot be dated. He should not sign off, amend the file himself or quietly withdraw.
- ASign off the review since the partner has taken responsibility for the judgement
- BRaise the concerns with the engagement partner, and if unresolved, notify the firm so the engagement quality review is not concluded and the report is not dated until resolvedCorrect
- CAmend the audit file himself so that the specialist's advice is documented
- DWithdraw from the review and let the firm appoint a different reviewer without informing anyone of the concerns
Explanation
ISQM 2 requires the EQR to notify the engagement partner if concerns suggest significant judgements or conclusions are not appropriate, and if unresolved, to notify an appropriate individual in the firm; the review is not complete and the report cannot be dated. The partner's responsibility does not remove the reviewer's duty. The reviewer should not rewrite the file, and quietly withdrawing would hide a known issue.
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