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

Rao & Partners reviewed the file of Himalaya Agro Ltd (unlisted). The firm's criteria for engagement quality control review include public interest, unusual risks and legal requirements. Which situation, standing alone, would fit the criteria in SQC 1 for requiring a review of an engagement other than a listed entity audit?

The engagement with unusual circumstances or risks fits the criteria. SQC 1 says firms consider public interest in the nature of the engagement, unusual circumstances or risks, and whether laws or regulations require a review. Furniture changes, partner tenure and fee instalments are not listed criteria.

  1. AThe client has recently changed its office furniture
  2. BThe engagement involves unusual circumstances or risks identified by the firmCorrect
  3. CThe engagement partner has worked for the firm for over ten years
  4. DThe client's audit fee is paid in two instalments

Explanation

SQC 1 lists criteria for non-listed engagements: nature of engagement including public interest, identification of unusual circumstances or risks, and whether laws or regulations require a review. Only unusual circumstances or risks matches. The other options are unrelated to the listed criteria.

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