Engagement Quality Review (ISQM 1- Scalable Systems)

Question 1

Required for listing companies?

Answer 1

Yes

Question 2

What does a review include?

Answer 2

1. Discussion of significant matters w. the engagement partner
2. Review of FS & proposed auditors report.
3. Review of selected audit documentation relating to significant judgementsof the engagement team.
4. Evaluation of conclusions reached in formulating the auditors report & consideration of whether report appropriate.

*

Question 3

Requirments for listed companies?

Answer 3

1. Evaluate firm’s independence in relation to engagement
2. Apporpriate consultations taken place on matters w. differences of opinion.
3. Whether audit doc reflect work performed in relation to significant estimates and support conclusions.
   4.

Question 4

Quality Management engagement lvl Purpose of System

Answer 4

• Firm & personell comply w. standard & legal & regulatory requirements
• All services & reports appropriate.
• Firm needs own SOQM- relevant to individual needs of firm.
• Set tone from TOP
• System & policies support quality not client retention & profits.

Question 5

Features of ISQM 1

Answer 5

1. Pro-active & tailored approach
2. System to identify & respond to risk means increase likelihood of correct opinion
3. Govt & leadership - increased responsibiity to fulfill quality.
4. Timely remediation of issues/deficiencies: monitor quality systems.

Question 6

Answer Template

Answer 6

• Risk
• Why risks
• Response to Risk
• Criticism of Response.

Question 7

Ethics Related to EQR

Answer 7

• Familiarity-Long association >7yrs
• Leadership, direction, supervision missing.
• Inappropriate timelines = poor planning
• Quality system failing - regular backups
• Complete audit file must be assesed & reviewed in logical order
• oN OR B4 date of report- review for sufficiency and appropriateness.

Question 8

Criteria for Reviewer?

Answer 8

• Competence/Knowledge of industry
• Authority/Seniority to resist intimidation
• Compliance with ethics
• Cannot be member of audit engagement - 2yr cooling off.

Question 9

Work of a reviewer?

Answer 9

• Assess significant judgements
• Ensure working papers correct
• Appropriate conclusions reached
• Engagement partners determined independence
• Appropriate consultation for contentious matter
• Engagement partner sufficient & appropriate involvment.