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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 Foods Ltd, a listed company. The engagement partner proposes to sign and issue the audit report on Friday and have the engagement quality control reviewer finish the review the following week, since the reviewer has already seen the key working papers. What is the correct position under SQC 1?

The engagement quality control review must be completed before the audit report is issued. SQC 1 requires firm policies to say so, and listed entity audits need such a review. Completing it after issue, even within a week, is not permitted.

  1. AThe report may be issued first, provided the review is completed within a week of issue
  2. BThe review is needed only if the audit committee requests it
  3. CThe review may be skipped because the reviewer has already seen the key working papers
  4. DThe engagement quality control review must be completed before the report is issuedCorrect

Explanation

SQC 1 requires the firm's policies to mandate completion of the engagement quality control review before the report is issued. An audit of a listed entity requires such a review. Issuing the report first and completing the review later, even within a week, breaches this requirement, so the first option is wrong.

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