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CA Final · Advanced Auditing, Assurance and Professional Ethics · Quality Control

Mehta & Associates, a CA firm, is auditing the financial statements of Sundaram Textiles Ltd, a listed company. The engagement partner proposes to sign and issue the audit report on 10 May and to have the engagement quality control review documented later in the month, as the reviewer is travelling. What is the correct position under SQC 1?

The engagement quality control review must be completed before the audit report is issued. Under SQC 1, such a review is mandatory for audits of listed entities, so the report on Sundaram Textiles cannot be signed on 10 May with the review pending, nor can the partner's own certificate substitute for it.

  1. AThe report may be issued on 10 May, provided the review is completed within the following month
  2. BThe report may be issued if the engagement partner personally certifies that the significant judgments were appropriate
  3. CThe review must be completed before the report is issued, as the audit is of a listed entityCorrect
  4. DThe review is optional for a listed entity if the firm has a strong monitoring process

Explanation

SQC 1 requires an engagement quality control review for all audits of financial statements of listed entities. The firm's policies must require the review to be completed before the report is issued. Issuing the report first and completing the review later breaches this requirement, and the partner's own certificate cannot replace an objective review.

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