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

Sunrise Textiles Ltd, a listed company, is being audited by Mehta & Associates, a firm of Chartered Accountants. The partner proposes to issue the audit report on Friday and complete the engagement quality control review the following Monday, saying the review is only a formality. Under SQC 1, what is the correct position?

The engagement quality control review must be completed before the audit report is issued. SQC 1 requires this timing, and also requires a review for all audits of listed entities, so completing it after issuing the report breaches the firm's required policies.

  1. AThe review must be completed before the report is issuedCorrect
  2. BThe review may be completed after the report is issued if the partner approves
  3. CThe review is needed only if Sunrise Textiles Ltd has unusual risks
  4. DThe review is optional for the listed company if the partner is experienced

Explanation

SQC 1 requires the firm's policies to require completion of the engagement quality control review before the report is issued. It also requires such a review for all audits of financial statements of listed entities. Hence the Monday review cannot follow a Friday report, and partner approval or experience does not change this.

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