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

Nair & Co has completed the engagement quality control review of a listed client's audit, and the reviewer has signed off. The file note records that the review procedures required by firm policy were performed and that the review was completed before the report date. The reviewer, however, is aware of an unresolved disagreement on whether the engagement team's judgment on a significant provision was appropriate. Which conclusion is correct under SQC 1?

Documentation is inadequate. SQC 1 requires recording that procedures were performed, that the review finished before report issuance, and that the reviewer knows of no unresolved matters suggesting significant judgments or conclusions were inappropriate. An existing unresolved disagreement means the third element cannot be recorded.

1. ADocumentation is adequate, since procedures were performed and timing was met
2. BDocumentation is inadequate, as it must also record that the reviewer is not aware of any unresolved matters casting doubt on the appropriateness of significant judgments and conclusionsCorrect
3. CDocumentation is adequate, because unresolved matters need to be recorded only in the engagement partner's file
4. DDocumentation is inadequate only because the review should have been completed after the report date