SSA 220 – Quality Control for an Audit of Financial Statements

This SSA concerns the responsibilities of the auditor relating to quality control procedures and also the responsibilities of the EQCR (engagement quality control reviewer). This is necessary in order to comply with SSQC1. EQCR is useful as it gives assurance that the audit complies with professional standards and applicable legal and regulatory requirements.

The engagement partner shall take responsibility for the overall quality on each audit engagement. Quality is essential in performing audit engagements. He needs to remain alert for evidence of non-compliance with ethical requirements (ACRA code). If there is non-compliance, appropriate action must be taken.

The partner also needs to assess and conclude on the independence requirements (eliminate the activity, withdraw the engagement if not-independent). He needs to be satisfied on appropriate procedures in relation to acceptance and continuance of client relationships and audit engagements. He needs to be satisfied that the engagement team has the right competence and capabilities. He is also responsible for the right direction, supervision (track progress of engagement, address significant matters, identify matters for consultation) and performance of the audit engagement.

In addition, they are responsible for consultations that are taken within the engagement team.

For audits that require EQCR, the partner shall discuss significant matters arising during the engagement with the EQCR reviewer. The audit report should only be stated on or after the EQCR review and the EQCR should be conducted in a timely manner.

The EQCR needs to look at discussion of significant matters, review of FS, review of selected audit documentation and evaluation of the conclusions reached. They also might need to examine independence of the audit firm, and whether there is appropriate consultation.

There needs to be a proper monitoring process for EQCR as well, and to ensure that P&P relating to system of quality control are relevant, adequate and operating effectively. Partners can usually rely on the system of quality control and the role of engagement teams.

Reviews by the engagement partner must be timely in nature and they should examine areas like critical areas of judgment, significant risks, other areas etc. The engagement partner need not review all audit documentation, but may do so. However, as required by SSA230, the partner documents the extent and timing of the reviews.

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