Engagement Quality Review Requirements (EQR)coverin g ► Nature timing and extent of EQR ► Eligibility of engagements to be covered in EQR ► Engagement Documentation comprising ► Completion of files ► Confidentiality and safe custody of files ► Retention of records
To ensure that engagements are performed in accordance with professional standards and regulatory and legal requirements, and that the firm or partner issues appropriate reports
► The firm seek to achieve consistency in engagement performance through manuals (written or electronic), software tools or other standardized documentation and industry and subject matter-specific guidance materials.
► The briefing to Engagement Teams on understanding their work objectives
► The process for complying with applicable standards
► The processes for engagement supervision, training and coaching
►The methods of reviewing work performed, and significant judgments made
► That adequate documentation of work is performed
► Updating policies and procedures and kept current
► The Supervision policies would cover tracking of engagement progress, considering competencies of team, and addressing significant issues and identifying consultation matters
The Review responsibilities are determined on the basis that more experienced engagement team members review work performed by lesser experienced members and the process ensures that
► Appropriate consultation takes place on difficult or contentious matters and that sufficient resources are available to enable appropriate consultation to take place
► Nature and scope of such consultations are documented
► Conclusions from those consultations are documented and implemented
► Consultation could be external or internal, uses overall firm experience, to ensure that persons consulted have all relevant facts
► Documentation of consultation with other professionals is agreed by both the individual seeking the consultation and the individual consulted. The Documentation is sufficiently detailed and complete to enable an understanding of the issue and the results (including the decision and basis thereof) of the consultation.
The Firm has established criteria against which all engagements covered by this section should be evaluated to determine whether an engagement quality control review should be performed.
The Firm’s policies and procedures require that if an engagement meets the criteria established, an engagement quality control review should be performed for that engagement.
The Firm has established policies and procedures setting out the nature, timing, and extent of an engagement quality control review. Such policies and procedures require that the engagement quality control review is completed before the report is released.
The Firm has established policies and procedures to require the engagement quality control review to include:
Discussion of significant findings and issues with the engagement partner;
Reading the financial statements or other subject matter information and the proposed report;
Review of selected engagement documentation relating to significant judgments that the Engagement team made and the related conclusions it reached; and
Evaluation of the conclusions reached in formulating the report and consideration of whether the proposed report is appropriate
The Firm has a Policy to address Differences of opinion ► Procedures for dealing with and resolving difference of opinion ► within the engagement team ► with those consulted and ► between the engagement partner and EQR reviewer. ► Conclusions should be documented and implemented. The Report will not be issued till the matter is resolved
The Firm Engagement considers ► Nature of the engagement including the extent to which it involves matters of public interest. ► Identification of unusual circumstances or risks (significant litigation, going concern issues, etc) in an engagement or class of judgements ► Whether laws and regulations require setting out the nature, timing and extent of the Review ► Whether appropriate consultations have taken place – difficult or contentious matters or differences of opinion ► The significance and disposition of misstatements during the audit ► Whether working papers reviewed support the conclusion on the related risk ►The appropriateness of the report to be issued
The criteria for eligibility of an engagement quality reviewer involves discussion with the engagement partner, review of the financial statements, other information, the report and review of selected workpapers relating to the significant judgements made by the engagement team
The EQR is conducted to the reviewer’s satisfaction before the report is issued ► The Firm’s policies address the appointment of EQRs and establish their eligibility through ► Technical qualifications required to perform the role including necessary experience and authority ► Degree to which EQR can be consulted without compromising objectivity ► Other matters to maintain objectivity of the EQR reviewer could need to cover ► That he is not selected by the engagement partner ► He does not otherwise participate in the engagement ► Does not make decisions for the engagement team ► For sole practitioners suitably qualified external persons contracted to perform EQR review.
The Firm’s policies require that the following be documented to evidence performance of EQR ► Documentation to demonstrate the procedures required by the firm’s policies on quality review have been performed ► The process is completed before issuance of the report ► Reviewer not aware of any unresolved matters
The Firm Engagement Documentation ensures ► Completion and assembly of final audit files after completion of engagement on a timely basis (specifies maximum time limit of 60 days) ► Confidentiality, safe custody, integrity, accessibility and retrievability of engagement documentation ►Ensure that , integrity cannot be compromised by alteration, addition to or deletion without the Firm’s knowledge and hence the firm should ► Enable the determination of when and by whom engagement documentation was created, changed or reviewed ► Protect its integrity (including when it is shared within the engagement team or transmitted to other parties via the internet) ► Prevent unauthorised changes and ► Allow required access to the same by the appropriate personnel in discharge of their duties Greater difficulty in ensuring these with paper documentation
The Firm should ensure policies for retention of documentation as required by laws and regulation. Currently this is required to be retained for 8 years
The Firm has established criteria against which all engagements covered by this section should be evaluated to determine whether an engagement quality control review should be performed.
The Firm’s policies and procedures require that if an engagement meets the criteria established, an engagement quality control review should be performed for that engagement.
The Firm has established policies and procedures setting out the nature, timing, and extent of an engagement quality control review. Such policies and procedures require that the engagement quality control review is completed before the report is released.
The Firm has established policies and procedures to require the engagement quality control review to include:
Discussion of significant findings and issues with the engagement partner;
Reading the financial statements or other subject matter information and the proposed report;
Review of selected engagement documentation relating to significant judgments that the Engagement team made and the related conclusions it reached; and Evaluation of the conclusions reached in formulating the report and consideration of whether the proposed report is appropriate