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

Mehta & Co. signed the audit report on Ganga Pharma Ltd, a listed company, on 10 May. The engagement quality control review was finished on 14 May, after the report had been issued. Which statement is correct under SQC 1?

The timing breaches SQC 1. The firm's policies should require the engagement quality control review to be completed before the report is issued, and documentation must confirm this. Finishing the review after the report date does not meet the requirement, even if no problems are found.

  1. AThe timing is acceptable because the review was completed within a week of the report
  2. BThe timing is acceptable provided the reviewer finds no unresolved matters
  3. CThe firm's policies should require completion of the review before the report is issued, so the timing breaches this requirementCorrect
  4. DThe review need only be completed before the next annual audit

Explanation

SQC 1 states that the firm's policies should require the review to be completed before the report is issued. Documentation must also record that completion occurred before issue. A review finished four days later fails this, even if no issues are found.

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