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

Rao & Co. is auditing Kaveri Foods Ltd, a listed company. The audit report is signed and issued on 10 June. The engagement quality control review was completed on 14 June and documented on that date. Which conclusion is correct under SQC 1?

The firm has not complied, because SQC 1 requires the engagement quality control review to be completed before the audit report is issued. Completing and documenting it on 14 June, after the 10 June report date, is a breach even if no issues were found.

  1. AThe firm's policy is complied with, as the review was completed within a week of report issue
  2. BThe firm's policy is not complied with, because the review must be completed before the report is issuedCorrect
  3. CThe firm's policy is complied with, provided the reviewer finds no unresolved matters
  4. DThe firm's policy is complied with, as documentation of the review is the only requirement with a timing condition

Explanation

SQC 1 requires the firm's policies to require completion of the engagement quality control review before the report is issued. Here completion on 14 June followed issue on 10 June. A clean outcome later does not cure the timing breach.

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