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

Ritu Desai is the engagement quality control reviewer for an audit of a large listed bank. She completes her review on 10 May, but the engagement partner issued the audit report on 8 May to meet a deadline, planning to document the review later. Which statement is correct under SQC 1?

The practice breaches SQC 1. The firm's policies must require the engagement quality control review to be completed before the report is issued, and the documentation must confirm this. A review finished two days after the report date cannot satisfy that requirement, even if no issues are found.

  1. AThe practice is acceptable if the review is documented within the same month
  2. BThe practice is acceptable because the review does not reduce the partner's responsibility
  3. CThe practice is acceptable if the reviewer finds no unresolved matters
  4. DThe practice breaches the requirement that the review be completed before the report is issuedCorrect

Explanation

SQC 1 requires the firm's policies to require completion of the review before the report is issued. Documentation must also record that the review was completed before issue. A review finished on 10 May after a report issued on 8 May breaches this, whatever its findings.

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