"SA 220 is premised on the basis that the firm is subject to SQC 1". What do you understand by given statement in context of audit quality?
CA Intermediate · Auditing and Ethics · RTP · May 2024
"SA 220 is premised on the basis that the firm is subject to SQC 1". What do you understand by given statement in context of audit quality?
Suggested Answer and Working Notes:
Audit quality is essential to maintain confidence in the independent assurance provided by the auditors. It is responsibility of auditor to maintain high audit quality. SQC 1 and SA 220 both deal with quality control. SQC 1 applies to entire firm. However, SA 220 applies to a particular audit engagement. Based upon quality control system of firm established in accordance with requirements of SQC 1, quality control policies pertaining to audit engagements are decided by engagement teams. Engagement partner of a team is responsible for quality control procedures of a particular audit engagement in accordance with SA 220. Therefore, SA 220 is premised on the basis that the firm is subject to SQC 1. Within the context of the firm's system of quality control, engagement teams have a responsibility to implement quality control procedures that are applicable to the audit engagement.
Topics: Ethics and Terms of Audit Engagements
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