Chapter 23 Flashcards
What is the main objective of Quality Control in Audit.
To implement a system of quality control to ensure:
- engagement is performed as per legal and professional standards, and
- report is appropriate in circumstances..
What are the elements of a Quality Control System.
- Leadership responsibilities.
- Ethical Requirements.
- Acceptance and Continuance procedures.
- Assignment of Team.
- Performance of Engagement.
- Monitoring.
Who has the leadership responsibility in a Quality Control Review System.
Engagement Partner has the over leadership responsibility for quality and quality control procedures on each audit engagement.
Who is required to comply with relevant ethical requirements in a Quality Control System.
Engagement Partner should remains alert throughout engagement through observation for evidence of non-compliances of ethics by the members of engagement team.
If any non-compliance has occurred, he shall determines and take appropriate action.
Engagement Partner should forms conclusion on independence requirements.
For this purpose, he shall:
1. Obtains information from the firm to identify threats to independence and evaluate them.
2. Applies safeguards to eliminate those threats or reduce them to an acceptable level (including withdrawal).
3. Evaluates information on identification of breaches firm’s independence policies and procedures.
Explain Acceptance and Continuance procedures relating to Quality Control Review.
Firm shall establish and perform the acceptance and continuance procedures to ensure that only those clients are accepted in which firm has considered Competence and Integrity of MGT.
Engagement Partner shall ensure that:
- Procedures regarding acceptance and continuance are performed.
- Conclusion is appropriate and have been documented.
If any information is identified affecting the acceptance decision, partner shall communicate there matters to firms so that necessary steps could be taken.
Explain the Assignment of Engagement Team in Quality Control.
Engagement partner shall ensure that team has sufficient competence, and capability to perform the engagement to ensure that: (including Expert)
- engagement is performed as per legal and professional standards, and
- report is appropriate in circumstances.
Explain Direction, Supervision and Review of Engagement Performance by Engagement Partner in Quality Control.
Engagement Partner shall ensure:
- Direction, Supervision and Review of engagement that audit is conducted in accordance with ISA’s and regulatory requirements.
- Sufficient Appropriate evidence has been obtained before report is signed, and report is appropriate.
What consultation an engagement partner shall made during Performance of Quality Control Engagement.
Engagement Partner shall:
- take responsibility that engagement undertakes consultation.
- ensure that appropriate consultation has been obtained within the team, within the firm, outside the firm.
- Consultations are implemented.
- Nature of consultation and conclusions are documented.
What is required to be done when there is a difference of opinion b/w members of an engagement team.
Engagement team shall follow firm’s policies and procedures to resolve difference of opinion.
Difference b/w internal and external Quality Control Review.
- Internal review is conducted by a separate department of firm establish to perform review, however, external review is conducted by ICAP or SECP.
- Internal review is conducted before signing of audit report however, external review is conducted after signing of audit report.
What is the responsibility of Engagement Partner regarding quality control review.
- Ensure that QC Reviewer is appointed.
- Discuss significant matters with him.
- Sign audit report after completion of QCR.
What is the responsibility of Quality Control Reviewer regarding quality control review.
- Review F/S and proposed report.
- Discuss significant matters with partner.
- Review documentation relating to significant judgments.
- Evaluate conclusions reached and appropriateness of report.
What is the additional responsibility of Quality Control Reviewer for Listed Companies regarding quality control review.
Reviewer shall ensure:
- The independence of team.
- Consultation on difficult matters and conclusions reached.
- Audit documents show work performed in relation to significant judgments and support the conclusions reached.
Explain element of Monitoring in Quality Control System.
Partner shall review reports on monitoring of Quality Control System of firm and evaluate whether any deficiencies are noted.
What is responsibility of Engagement Partner regarding documentation of Quality Control System.
- Conclusion on A & C Procedures.
- Conclusions on compliance with Independence requirement.
- Issues identified relating to compliance with ethical requirements and how resolved.
- Nature and scope of consultations undertaken during the scope of audit.
