Quality Control Review
Quality control is the procedure that audit firms use to ensure they have met the professional responsibility for all the clients.
Auditors are the people who issue their opinion on the company’s financial statement. They have to review the supporting document, analyze the business transaction and evaluate the compliance with accounting standard. These works require so much professional judgment, technical knowledge, independence, and professional skepticism.
Any misjudgment and error during the fieldwork will lead to the final conclusion. If the auditors are not independent, there will be a chance that the audit opinion does not reflect the real business performance. The financial statement may contain error or fraud which is not true and fair to the readers.
The users of financial statements rely heavily on the auditors opinion on the reporting. It is almost impossible for the outsider to validate the true and fair of the financial statement. So if the report contains an error and auditors cannot detect it, it will be a problem.
Auditors have a big liability to the public, they have to work for the public interest to show that their opinion reflect the true even it has to go against their clients. At the same time, auditors receive revenue from the client for their service performed.
However, if auditors keep issue poor quality audit opinion, they will lost the trust from the public. And they will lose the revenue as the clients will not use their services in the future as well.
To prevent such issues, the audit firm has to prove that all the work performance for the clients needs to follow a strict policy to ensure quality. It will prove that the firm is trying their best to provide the best quality service to the client and public trust. It also prevent the neglect of the staffs in any specific engagement.
Quality Control Review
The audit firm has to set the internal procedure to ensure that all engagement teams follow the same audit procedure. It must comply with the International Standard on Auditing which is the guideline for most firms.
There are the internal teams who will review the work perform of all engagement team to ensure they have follow the standard procedures. Before accepting any new clients, It must be a procedures in place to evaluate the risk of the firm.
Element of Quality Control Review
- Independence, Integrity, and Objectivity
The engagement quality reviewer has sufficient competence, independence, integrity, and objectivity to perform the engagement quality review. It must be included in the audit firm procedure.
The procedures should address how the reviewer will become knowledgeable about the requirements of the applicable professional standards and reject any engagements that would present a conflict of interest.
The reviewer should have sufficient knowledge about accounting and auditing to identify potential problems with the engagement team’s work. The reviewer should be independent of the engagement team and not have been involved in any aspects of the engagement. The reviewer should have integrity in order to be unbiased when reviewing the work of the engagement team. Finally, objectivity is important for the reviewer to be able to identify any issues with the way the engagement was conducted. By having these qualities, the firm can be assured that the review will be objective and competent.
- Acceptance and Continuing Clients and engagements
The engagement partner is responsible for ensuring that appropriate procedures are followed with regards to accepting and continuing client audit engagements.
The firm must have a proper procedure to evaluate the client before accepting or continuing the engagement service. This ensures that our clients are only those with whom we can establish a positive and productive working relationship and that audits are conducted to the highest standards.
- Engagement Performance
The engagement partner is responsible for ensuring that the audit engagement is conducted in accordance with professional standards, applicable legal and regulatory requirements, and the firm’s policies. The engagement partner must also provide direction and supervision to the audit team to ensure that the audit is carried out effectively and efficiently.
This is an essential part of any quality assurance system and needs to be carried out on a regular basis. It is important to ensure that all reviews are conducted in accordance with the designed policies and procedures. This will help to ensure that all relevant aspects of the process are covered and that any areas of concern are identified and addressed. Reviewing the process on a regular basis will also help to identify any potential improvements that could be made.
Important of Quality Review
The quality control review helps to ensure that the company is providing services in accordance with standards. This assurance can help companies create credibility and accountability when it comes time for client contact, as well a sense of trust from clients. It will show how their needs will be met due diligence being done on behalf of them.
The addition of quality control review to the process of the financial statements helps provide greater assurance that all necessary parameters have been met.