"Engagement Quality Control Review
.21 For those audit engagements, if any, for which the firm has determined that an engagement quality control review is required, the engagement partner should
- determine that an engagement quality control reviewer has been appointed;
- discuss significant findings or issues arising during the audit engagement, including those identified during the engagement quality control review, with the engagement quality control re-viewer; and
- not release the auditor's report until the completion of the engagement quality control review. (Ref: par. .A23–.A25)
- discussion of significant findings or issues with the engagement partner;
- reading the financial statements and the proposed auditor's report;
- review of selected audit documentation relating to the significant judgments the engagement team made and the related conclusions it reached; and
- evaluation of the conclusions reached in formulating the auditor's report and consideration of whether the proposed auditor's report is appropriate. (Ref: par. .A26–.A31)
.23 If differences of opinion arise within the engagement team; with those consulted; or, when applicable, between the engagement partner and the engagement quality control reviewer, the engagement team should follow the firm's policies and procedures for resolving differences of opinion."
An engagement quality control review is a process designed to provide an objective evaluation, before the report is released, of the significant judgments the engagement team made and the
conclusions it reached in formulating the auditor's report. The engagement quality control review process is only for those audit engagements, if any, for which the firm has determined that
an engagement quality control review is required, in accordance with its policies and procedures.
An engagement quality control reviewer is a partner, other person in the firm, suitably qualified external person, or team made up of such individuals, none of whom is part of the engagement team,
with sufficient and appropriate experience and authority to objectively evaluate the significant judgments that the engagement team made and the conclusions it reached in formulating the auditor's
report.
An engagement quality control review should be conducted in a timely manner at appropriate stages during the engagement so that significant findings or issues can be promptly resolved to the engagement quality control reviewer's satisfaction.
Documentation of the engagement quality control review may be completed after the
report release date as part of the assembly of the final audit file, as required in AU-C Section 230. However, when the engagement quality control review is completed after the auditor's report is dated and identifies instances where additional procedures or additional evidence is necessary, the date of the report should be changed to the date when the additional procedures have been satisfactorily completed or the additional evidence has been obtained, as required by AU-C Section 700.
The engagement partner should be alert for changes in circumstances in which an engagement quality control review is necessary, even though at the start of the engagement such a review was not required. The extent of the engagement quality control review may depend, among other things, on the complexity of the audit engagement and the risk that the auditor's report might not be appropriate in the circumstances. The performance of an engagement quality control review does not reduce the responsibilities of the engagement partner for the audit engagement and its performance.
Matters that may be considered in an engagement quality control review include the following:
- Significant risks identified during the engagement in accordance
with AU-C Section 315 and the responses to those risks in accordance with AU-C Section 330, including the engagement team's assessment of, and response to, the risk of fraud in accordance with AU-C Section 240 - Judgments made with respect to materiality and significant risks
- The significance and disposition of corrected and uncorrected misstatements identified during the audit
- The matters to be communicated to management and those charged with governance and,when applicable, other parties, such as regulatory bodies
- The evaluation of the firm's independence with regard to the audit engagement
- Whether appropriate consultation has taken place on matters involving differences of opinion or other difficult or contentious matters and the related conclusions arising from those consultations
- Whether audit documentation selected for review reflects the work performed regarding the significant judgments and supports the conclusions reached
https://www.aicpa.org/content/dam/aicpa/research/standards/auditattest/downloadabledocuments/au-c-00220.pdf
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