Quality Control

Question 1

Elements of Quality Control

Answer 1

H-Human Resources
E-Engagement/client acceptance and continuance
L-Leadership Responsibilities
P-Performance of the engagement
M-Monitoring
E-Ethical Requirements

Question 2

Human Resources

Answer 2

recruiting, hiring, determine capabilities and competencies, assigning personnel to engagements, professional development, performance evaluation, compensation, and advancement.

Question 3

Engagement/Client Acceptance and Continuance

Answer 3

deciding whether to accept or continue a client relationship, minimizes the likelihood of association with a client whose management lacks integrity.

Question 4

Leadership Responsibilities for Quality Within the Firm

Answer 4

-“tone at the top” (Control Environment, Risk Assessment, Information, Monitoring, Existing control activities)

Question 5

Performance

Answer 5

ensure that that engagement is appropriately supervised

allow consultation with experts inside or outside the firm with respect to complex

Question 6

Monitoring

Answer 6

ongoing consideration and evaluation of the design and effectiveness of the quality control system.
a partner, responsibility for the monitoring process

Question 7

Peer Review

Answer 7

you have to have EVERY 3 Years!

Question 8

Ethical Requirements

Answer 8

to maintain public confidence in the profession

Question 9

Review the work of others

Answer 9

• performed in accordance with professional standards
• issues need further consideration
• consultations have taken place
• nature, extent, and timing of the work performed
• work performed support the conclusions
• evidence obtained is sufficient and appropriate

Question 10

Engagement Partner Review

Answer 10

• engagement partner should review
  
  • critical areas of judgement
  • significant risks = “Always revenue recognition/management override”

Question 11

Quality Control Standards - nonissuer

Answer 11

provides reasonable assurance that…(AICPA Standard)

• audit complies with professional standards
• issues a report that is appropriate
• engagement partner is responsible for….
  
  • evidence of noncompliance
  • independence requirements
  • procedures regarding clients
  • competence
  • responsibility for the direction, supervision, and performance
  • responsibility for reviews being performed
  • sufficient appropriate audit evidence has been obtained

Question 12

Quality Control Standards - issuer

Answer 12

(PCAOB Standard)

• quality reviewer is required to hold discussion with the engagement partner
• significant judgement
• responses to significant risk
• materiality, corrected and uncorrected “SOAP”
• Independence
• documentation
• financial statements
• filed with SEC
• COMMUnications