CA Final · Advanced Auditing, Assurance and Professional Ethics · Quality Control
Mehta & Rao, a CA firm, is auditing the financial statements of Sundaram Foods Ltd, a listed company. The engagement partner proposes to issue the audit report on Friday and to complete the engagement quality control review the following Monday, since the reviewer is travelling. What is the correct position under SQC 1?
The report must not be issued until the engagement quality control review is complete. SQC 1 requires firm policies to mandate completion of the review before report issuance, and a listed entity audit always requires such a review. Issuing first and reviewing later is not permitted.
- AThe report may be issued Friday, as the review is a post-issuance check of the firm's system
- BThe report may be issued Friday if the reviewer gives verbal clearance, with documentation done later
- CThe review is not required, as the engagement partner has already approved the work
- DThe report should not be issued until the engagement quality control review is completedCorrect
Explanation
SQC 1 requires the firm's policies to demand completion of the engagement quality control review before the report is issued. Audits of listed entities must always have such a review. Issuing the report first, or relying on verbal clearance with later paperwork, breaches this requirement.
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