Quality Control Standards- CPA AUD

Relationship of the Statements on Quality Control Standards to GAAS?

o SQCS are issued by the AICPAs Auditing Standards Board
o GAAS apply to each individual audit engagement
o SQCS apply to the whole portfolio of accounting and auditing engagements,

which involves the public interest due to the financial statement subject
matter
These AICPA Quality Control Standards do NOT apply to tax or consulting

o
o

services
Note that SQCS involve reasonable (not absolute) assurance regarding:
Compliance with professional standards and legal and regulatory

requirements
o That reports issued are appropriate
6 elements of a Quality Control System
o Leadership responsibilities
tone at the top
o Relevant ethical requirements
Especially related to independence issues
o Acceptance and continuance of clients and specific engagements
o Human resources
Recruiting and hiring
Assignments
Professional development and continuing education
Evaluation, promotion, and compensation issues
o Engagement performance
Consultation with others
Compliance with policies/standards
o Monitoring
Quality control is not a one-time issue
Requires continuous assessment over time.
A clarified Standard Addresses QC Issues at the engagement level
o Responsibility
The engagement partner is responsible for overall audit quality
o Defined engagement quality control review
A process designed to provide an objective evaluation, before the
report is released, of the significant judgments the engagement team

made and the conclusions it reached in formulating the auditors

report.
Not required for all audits, just for those that the firm determines is

necessary
Documentation Requirements
o The quality control reviewer should document:
Issues (and resolution of issues) related to ethical
requirements, including conclusions about any
independence matters
Conclusions about the acceptance/continuance of client
relationships
Issues and conclusions related to consultations
That the required procedures have been performed
The date that the engagement quality control review was
completed.
That the reviewer is not aware of any unresolved matters
about the engagement teams significant judgments and
conclusions.