A2-Quality Control

Question 1

what are the 6 elements of quality control?

Answer 1

HELP ME maintain good quality in my accounting and auditing practice
1. Human resources
2. Engagement/client acceptance and continuance
3. Leadership responsibilities
4. Performance of the engagement
5. Monitoring
6. Ethical requirements

Question 2

what is a peer review?

Answer 2

• The purpose of peer review is to determine and report whether the CPA firm being reviewed has developed adequate policies and procedures for the elements of quality control and is following them in practice.
• A CPA firm that is a member of the AICPA must have a peer review every 3 years in order to maintain its membership in the AICPA

Question 3

what is the relationship between auditing (GAAS/GAAP) and quality control standards?

Answer 3

• they are different
• GAAS relate to the conduct of each individual audit engagement
• Quality control standards relate to the conduct of all professional activities of the firm’s practice as a whole.
• deficiencies in a firm’s quality control standards DO NOT necessarily indicate a lack of compliance with GAAS

Question 4

what are risks considered significant when engagement partner reviews?

Answer 4

significant risks = always revenue recognition and or management override

Question 5

what is a quality control system/standard?

Answer 5

a quality control system consists of policies and procedures designed, implemented, and maintained to ensure that the firm complies with professional standards and appropriate legal and regulatory requirements, and that any reports issued are appropriate in the circumstances

Question 6

who are not allowed to review the quality control of an audit?

Answer 6

member of the engagement team. Any qualified member of the firm or external person but not a member of the engagement team