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.
- SMP Information Gathering Survey
- Staff Audit Practice Alert - Responsibilities of the Engagement Partner in Circumstances when the Engagement Partner Is Not Located Where the Majority of the Audit Work is Performed
- Invitation to Comment, Enhancing Audit Quality in the Public Interest
The IAASB commenced its initial information gathering on the topic of quality control in June 2014 with a Working Group being formed in October 2014. The issues identified and discussed at the IAASB meetings are part of the Invitation to Comment on Enhancing Audit Quality in the Public Interest which was issued in December 2015. The Working Group will use the comments received on the Invitation to Comment as a basis for the project proposal which is scheduled to be discussed in December 2016.**
** Together with the ISA 600-Group Audits and Professional Skepticism project, this project is part of the Audit Quality Enhancements Coordination Group (AQECG). The AQECG intends to coordinate the various inputs to the invitation to comment developed at the individual working group level, and take a holistic approach as to how the matters are presented in one invitation to comment.
- IAASB Webcast: Proposed Changes to International Standard on Quality Control
- IAASB Webcast: Discussion on Three Quality Management Exposure Drafts
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.
MEETING HIGHLIGHTS - DECEMBER 2019
The Board generally supported the ISQM 2 Task Force’s revised proposals on the scope of engagements subject to an engagement quality (EQ) review and on a mandatory cooling-off period of two-years, or longer if required by relevant ethical requirements, to address objectivity for individuals moving into the role of EQ reviewer after serving as the engagement partner.
The Board also generally supported proposals on other matters, including the EQ reviewer’s evaluation of the exercise of professional skepticism by the engagement team, and considerations for an EQ review of a group audit engagement.
The ISQM 2 Task Force will consider the comments received in preparing a revised full draft of proposed ISQM 2 for discussion at the March 2020 IAASB meeting.