Quality Control for an Engagement Conducted in …

1 Quality Control for an Engagement127AU-C Section 220 Quality Control for an EngagementConducted in accordance with GenerallyAccepted auditing StandardsSource: SAS No. 122; SAS No. 128; SAS No. 134; SAS No. for engagements Conducted in accordance with generally ac-cepted auditing standards for periods ending on or after December 15,2012, unless otherwise of This section addresses the specific responsibilities of the auditor re-garding Quality Control procedures for an audit of financial statements. It alsoaddresses, when applicable, the responsibilities of the Engagement Quality con-trol reviewer. This section also applies, adapted as necessary, to other engage-ments Conducted in accordance with generally accepted auditing standards (GAAS) (for example, a review of interim financial information Conducted inaccordance with section 930,Interim Financial Information). This section is tobe read in conjunction with the AICPA Code of Professional Conduct and otherrelevant ethical Statements on Quality Control standards are not applica-ble to auditors in government audit organizations, this section is applicable toauditors in government audit organizations who perform financial audits inaccordance with of Quality Control and the Roleof the Engagement Control systems, policies, and procedures are the responsibilityof the audit firm.

2 Under QC section 10,A Firm's System of Quality Control ,thefirm has an obligation to establish and maintain a system of Quality Control toprovide it with reasonable assurance firm and its personnel comply with professional standardsand applicable legal and regulatory requirements issued by the firm are appropriate in the circumstances.(Ref: par..A1).04 Within the context of the firm's system of Quality Control , engagementteams have a responsibility to implement Quality Control procedures that areapplicable to the audit Engagement and provide the firm with relevant informa-tion to enable the functioning of that part of the firm's system of Quality controlrelating to .02 of QC section 10,A Firm's System of Quality .12 of QC section 10. 2021, AICPAAU-C Principles and teams are entitled to rely on the firm's system of qualitycontrol, unless the Engagement partner determines that it is inappropriate todo so based on information provided by the firm or other parties.

3 (Ref: par..A2).06 The Engagement partner may use the assistance of other members ofthe Engagement team or other personnel within the firm in meeting the require-ments of this section. The requirements imposed by this section on engagementpartners do not relieve other members of the Engagement team of any of theirprofessional section is effective for engagements Conducted in accordance withGAAS for periods ending on or after December 15, objective of the auditor3is to implement Quality Control proceduresat the Engagement level that provide the auditor with reasonable audit complies with professional standards and applicable le-gal and regulatory requirements auditor's report issued is appropriate in the purposes of GAAS, the following terms have the meanings at-tributed as follows: Engagement partner or other person in the firm whois responsible for the audit Engagement and its performance andfor the auditor's report that is issued on behalf of the firm andwho, when required, has the appropriate authority from a profes-sional, legal, or regulatory Quality Control process designed to pro-vide an objective evaluation, before the report is released, ofthe significant judgments the Engagement team made and theconclusions it reached in formulating the auditor's report.

4 Theengagement Quality Control review process is only for those au-dit engagements, if any, for which the firm has determined thatan Engagement Quality Control review is required, in accordancewith its policies and Quality Control partner, other person inthe firm, suitably qualified external person, or team made up ofsuch individuals, none of whom is part of the Engagement team, with sufficient and appropriate experience and authority to ob-jectively evaluate the significant judgments that the engagementteam made and the conclusions it reached in formulating the au-ditor's paragraph .14 of section 200,Overall Objectives of the Independent Auditor and the Conductof an Audit in accordance with generally accepted auditing standards , for the definition partner,partner,andfirmrefer to their governmental equivalents, when 2021, AICPAQ uality Control for an Engagement129 Engagement partners and staff performing the engage-ment and any individuals engaged by the firm or a network firmwho perform audit procedures on the Engagement .

5 This excludesan auditor's external specialist engaged by the firm or a termengagement teamalso excludes individuals within theclient's internal audit function who provide direct assistance onan audit Engagement when the external auditor complies with therequirements of section 610,Using the Work of Internal form of organization permitted by law or regulation whosecharacteristics conform to resolutions of the Council of the AICPAand that is engaged in public process comprising an ongoing consideration andevaluation of the firm's system of Quality Control , including in-spection or a periodic review of Engagement documentation, re-ports, and clients' financial statements for a selection of completedengagements, designed to provide the firm with reasonable assur-ance that its system of Quality Control is designed appropriatelyand operating association of entities, as defined in ET section , firm or other entity that belongs to a network, asdefined in ET section individual with authority to bind the firm with re-spect to the performance of a professional services purposes of this definition,partnermay include an employeewith this authority who has not assumed the risks and benefits ofownership.

6 Firms may use different titles to refer to individualswith this and promulgated by the AICPAA uditing standards Board or the AICPA Accounting and ReviewServices Committee under the "General standards Rule" (ET ) or the "Compliance with standards Rule" (ET ) of the AICPA Code of Professional Conduct, or otherstandards-setting bodies that set auditing and attest standardsapplicable to the Engagement being performed and relevant eth-ical ethical requirements to whichthe Engagement team and Engagement Quality Control reviewerare subject, which consist of the AICPA Code of Professional Con-duct together with rules of applicable state boards of accountancyand applicable regulatory agencies that are more , other than partners, including any specialiststhat the firm qualified external individual outside thefirm with the competence and capabilities to act as an engage-ment partner (for example, a partner of another firm).5 Paragraph.

7 06 of section 620,Using the Work of an Auditor's Specialist, defines the termaudi-tor's specialist. 2021, AICPAAU-C Principles and Responsibilities[As amended, effective for audits of financial statements for periods ending onor after December 15, 2014, by SAS No. 128. Revised, January 2015, to reflectconforming changes necessary due to the issuance of the revised AICPA Codeof Professional Conduct, effective December 15, 2014.]RequirementsLeadership Responsibilities for Quality on Engagement partner should take responsibility for the overallquality on each audit Engagement to which that partner is assigned. In fulfill-ing this responsibility, the Engagement partner may delegate the performanceof certain procedures to, and use the work of, other members of the engagementteam and may rely upon the firm's system of Quality Control . (Ref: par..A3)Relevant Ethical the audit Engagement , the Engagement partner and othermembers of the Engagement team should remain alert for evidence of non-compliance with relevant ethical requirements by members of the engagementteam.

8 (Ref: par..A4).12If matters come to the Engagement partner's attention, through thefirm's system of Quality Control or otherwise, that indicate that members ofthe Engagement team have not complied with relevant ethical requirements,the Engagement partner, in consultation with others in the firm as appropriate,should determine that appropriate action has been Engagement partner should form a conclusion on compliance withindependence requirements that apply to the audit Engagement . In doing so,the Engagement partner relevant information from the firm and, when applicable,network firms to identify and evaluate circumstances and rela-tionships that create threats to independence; information on identified breaches, if any, of the firm'sindependence policies and procedures to determine whether theycreate a threat to independence for the audit Engagement ; appropriate action to eliminate such threats or reduce themto an acceptable level by applying safeguards or, if considered ap-propriate, to withdraw from the audit Engagement when with -drawal is possible under applicable law or regulation.

9 The engage-ment partner should promptly report to the firm any inability toresolve the matter so that the firm may take appropriate action.(Ref: par..A5 .A6)Acceptance and Continuance of Client Relationshipsand Audit Engagement partner should be satisfied that appropriate proce-dures regarding the acceptance and continuance of client relationships and au-dit engagements have been followed and should determine that conclusionsreached in this regard are appropriate. (Ref: par..A7 .A8)AU-C 2021, AICPAQ uality Control for an the Engagement partner obtains information that would have causedthe firm to decline the audit Engagement had that information been avail-able earlier, the Engagement partner should communicate that informationpromptly to the firm so that the firm and the Engagement partner can takethe necessary action. (Ref: par..A8)Assignment of Engagement Engagement partner should be satisfied that the Engagement teamand any auditor's external specialists, collectively, have the appropriate compe-tence and capabilities the audit Engagement in accordance with professionalstandards and applicable legal and regulatory requirements an auditor's report that is appropriate in the circum-stances to be issued.

10 (Ref: par..A9 .A11) Engagement PerformanceDirection, Supervision, and Engagement partner should take responsibility for the direction, supervision, and performance of the audit engage-ment in compliance with professional standards , applicable legaland regulatory requirements, and the firm's policies and proce-dures (Ref: par..A12 .A14 and .A19) auditor's report being appropriate in the Engagement partner should take responsibility for reviews beingperformed in accordance with the firm's review policies and procedures. (Ref:par..A15 .A16 and .A19).19On or before the date of the auditor's report, the Engagement partnershould, through a review of the audit documentation and discussion with theengagement team, be satisfied that sufficient appropriate audit evidence hasbeen obtained to support the conclusions reached and for the auditor's reportto be issued. (Ref: par..A17 .A19) Engagement partner responsibility for the Engagement team undertaking appro-priate consultation on difficult or contentious matters; satisfied that members of the Engagement team have under-taken appropriate consultation during the course of the engage-ment, both within the Engagement team and between the engage-ment team and others at the appropriate level within or outsidethe firm; satisfied that the nature and scope of such consultations areagreed with , and conclusions resulting from such consultationsare understood by, the party consulted; that conclusions resulting from such consultationshave been implemented.