Even the smallest audit firm might sometimes need an engagement quality control review, as Lesley Meall reports.
If you are a sole practitioner or a partner in a small firm and you audit just a handful of relatively small entities each year, you may think that these audits are unlikely to need an engagement quality control review (EQCR) – and you may be correct. But then again, you might be wrong.
“Although people tend to think of the EQCR as being for the bigger firm, it is something all firms need to consider,” says Chris Cantwell, technical manager, practice regulation. This is because all audit firms must comply with the requirements of the International Standard on Quality Control 1 (ISQC 1).
As a recent faculty webinar and the March 2014 issue of Audit & Beyond article outlined, ISQC 1 requires every audit firm to establish and maintain a system of quality control. This must include policies and procedures that address various elements of quality control, including engagement performance and monitoring.
The reason some smaller audit firms may believe (mistakenly) that the EQCR only concerns larger firms is that ISQC 1 mandates these EQCRs for all listed entity audits, making them compulsory for only a subset of UK firms. But there are a number of reasons why unlisted UK entities may need an EQCR too, whether mandated or not...
This is an extract from an article in the June 2014 edition of Audit & Beyond, the magazine of the Audit and Assurance Faculty.
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