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

Sharma & Co. audits Janata Cooperative Housing Finance Ltd, an unlisted entity. The firm's criteria consider public interest, unusual risks and legal requirements. The engagement involves deposits from thousands of small investors and the team has noted an unusual related-party transaction. How does SQC 1 view the review decision?

The firm should weigh public interest and unusual risk, which point to a review. SQC 1 criteria include the engagement's nature and public interest, unusual circumstances or risks, and legal requirements, so an unlisted status alone does not exempt the engagement.

  1. ANo review is needed because the entity is unlisted
  2. BA review is needed only if the engagement partner requests it
  3. CThe firm should weigh the public interest and unusual risk factors, which point towards requiring a reviewCorrect
  4. DThe review depends only on the audit fee charged

Explanation

SQC 1 lists the nature of the engagement including public interest, unusual circumstances or risks, and legal requirements as criteria. Both public interest and an unusual risk are present here, so the criteria point to a review. Being unlisted does not remove the need to apply the criteria.

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