Quality control standards (SQCS)

Question 1

Relationship of GAAS to SQCS

• GAAS applicable to individual audit engagemnt
• SQCS applicable to collective PORTFOLIO acctng and auditing services (A&A). (not applicable to tax & consulting services)

Answer 1

FOCUS OF SYSTEM OF QUALITY CONTROL (QCS)

-to provide reasonable assurance regarding prof stnds and legal and regulatory reqs

1. nature & scope- policy and procedures to vary with circumstances
2. INHERENT LIMITATIONS- QCS provides REASONABLE assurance (high but not absolute)

Question 2

6 ELEMENTS OF QCS

1. leadership respb for quality “tone at the top”
2. relevant ethical reqs
3. ACCEPTANCE AND CONTINUANCE OF CLIENTS
   * * -integrity of mangmnt and those charges with governce
   - competence of engagement teams
   - compliance with ethical reqs (independence)
   - significant issues with prior engagements
4. Human resources
5. engagement performance
6. Monitoring

Answer 2

DIFF BTW SAS AND ISA

• SAS requires QC review compltd before engagement partner RELEASES auditors report
• ISA requires QC review compltd before engagement partner DATES auditors report

** QC procedures – deciding whether to accept a new client– minimize likelihood of association with clients whose mngmnt lacks integrity