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

Nair & Co. completes an engagement quality control review for Deccan Power Ltd, a listed entity. The file contains a note that the review procedures were performed and the review preceded the report date. The reviewer's concerns on a significant provisioning judgment remain unresolved, yet the file is silent on this. Which documentation is missing under SQC 1?

The missing item is documentation that the reviewer is not aware of any unresolved matters that would suggest the engagement team's significant judgments and conclusions were inappropriate. Here an unresolved provisioning concern exists, so this documentation cannot properly be given until it is resolved.

  1. ADocumentation that the reviewer is not aware of any unresolved matters affecting the significant judgments and conclusionsCorrect
  2. BDocumentation of the client's board approval of the review
  3. CDocumentation of the audit fee agreed for the review
  4. DDocumentation that all working papers were re-performed by the reviewer

Explanation

SQC 1 requires documentation that procedures were performed, that the review was completed before the report was issued, and that the reviewer is not aware of unresolved matters suggesting the significant judgments and conclusions were inappropriate. The file has the first two but not the third; indeed, an unresolved matter exists. Re-performance of all working papers is not required, as only selected working papers are reviewed.

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