Engagement Quality Reviews - ISQM 2
The objective of this project is enhancing the requirements and application material in relation to the firm’s engagement quality reviews (EQRs), including:
- setting more robust criteria for firms to apply when determining which engagements should be subject to an EQR;
- establishing the objective of an EQR;
- clarifying the nature, timing and extent of the EQR; and
- enhancing the requirements for the eligibility of the individuals who perform the review.
In doing so, consideration will also be given to maintaining the appropriate balance between the respective roles and responsibilities of the engagement quality reviewer and the engagement partner who retains overall responsibility for the engagement.
MEETING HIGHLIGHTS - DECEMBER 2018
The Board supported the requirement for the firm to establish policies or procedures addressing limitations on the engagement partner moving into the role of engagement quality reviewer, including the reference to a cooling-off period in the application material. The Board agreed that stakeholder views were needed relating to the objectivity of the engagement quality reviewer and a cooling-off period and supported the ISQM 2 Task Force’s recommendation for including specific questions in the Explanatory Memorandum on this matter to be developed in coordination with the IESBA. The Board also clarified the requirement for notifications by the engagement quality reviewer to the engagement partner and, when applicable, individual(s) within the firm, as well as the documentation requirements.
After making amendments in response to the Board’s comments received during the meeting, the Board approved the proposed Exposure Draft for public exposure. The ED will be issued in early February 2019 for comment by July 1, 2019.