Requirements

Applying, and Complying with, Relevant Requirements

14

The firm and the engagement quality reviewer shall have an understanding of this ASQM, including the application and other explanatory material, to understand the objective of this ASQM and to properly apply the requirements relevant to them.

15

The firm or the engagement quality reviewer, as applicable, shall comply with each requirement of this ASQM, unless the requirement is not relevant in the circumstances of the engagement.

16

The proper application of the requirements is expected to provide a sufficient basis for the achievement of the objective of this standard. However, if the firm or the engagement quality reviewer determines that the application of the relevant requirements does not provide a sufficient basis for the achievement of the objective of this standard, the firm or the engagement quality reviewer, as applicable, shall take further actions to achieve the objective.

Appointment and Eligibility of Engagement Quality Reviewers

17

The firm shall establish policies or procedures that require the assignment of responsibility for the appointment of engagement quality reviewers to an individual(s) with the competence, capabilities and appropriate authority within the firm to fulfill the responsibility. Those policies or procedures shall require such individual(s) to appoint the engagement quality reviewer. (Ref: Para. A1‑A3)

18

The firm shall establish policies or procedures that set forth the criteria for eligibility to be appointed as an engagement quality reviewer. Those policies or procedures shall require that the engagement quality reviewer not be a member of the engagement team, and: (Ref: Para. A4)

  1. Has the competence and capabilities, including sufficient time, and the appropriate authority to perform the engagement quality review; (Ref: Para. A5–A11)
  2. Complies with relevant ethical requirements, including in relation to threats to objectivity and independence of the engagement quality reviewer; and (Ref: Para. A12– A15)
  3. Complies with provisions of law and regulation, if any, that are relevant to the eligibility of the engagement quality reviewer. (Ref: Para. A16)

19

The firm’s policies or procedures established in accordance with paragraph 18(b) shall also address threats to objectivity created by an individual being appointed as an engagement quality reviewer after previously serving as the engagement partner. Such policies or procedures shall specify a cooling-off period of two years, or a longer period if required by relevant ethical requirements, before the engagement partner can assume the role of engagement quality reviewer. (Ref: Para. A17–A18)

20

The firm shall establish policies or procedures that set forth the criteria for eligibility of individuals who assist the engagement quality reviewer. Those policies or procedures shall require that such individuals not be members of the engagement team, and:

  1. Have the competence and capabilities, including sufficient time, to perform the duties assigned to them; and (Ref: Para. A19)
  2. Comply with relevant ethical requirements, including in relation to threats to their objectivity and independence and, if applicable, the provisions of law and regulation. (Ref: Para. A20‑A21)

21

The firm shall establish policies or procedures that:

  1. Require the engagement quality reviewer to take overall responsibility for the performance of the engagement quality review; and
  2. Address the engagement quality reviewer’s responsibility for determining the nature, timing and extent of the direction and supervision of the individuals assisting in the review, and the review of their work. (Ref: Para. A22)

Impairment of the Engagement Quality Reviewer’s Eligibility to Perform the Engagement Quality Review

22

The firm shall establish policies or procedures that address circumstances in which the engagement quality reviewer’s eligibility to perform the engagement quality review is impaired and the appropriate actions to be taken by the firm, including the process for identifying and appointing a replacement in such circumstances. (Ref: Para. A23)

23

When the engagement quality reviewer becomes aware of circumstances that impair the engagement quality reviewer’s eligibility, the engagement quality reviewer shall notify the appropriate individual(s) in the firm, and: (Ref: Para. A24)

  1. If the engagement quality review has not commenced, decline the appointment to perform the engagement quality review; or
  2. If the engagement quality review has commenced, discontinue the performance of the engagement quality review.

Performance of the Engagement Quality Review

24

The firm shall establish policies or procedures regarding the performance of the engagement quality review that address:

  1. The engagement quality reviewer’s responsibilities to perform procedures in accordance with paragraphs 25–26 at appropriate points in time during the engagement to provide an appropriate basis for an objective evaluation of the significant judgements made by the engagement team and the conclusions reached thereon;
  2. The responsibilities of the engagement partner in relation to the engagement quality review, including that the engagement partner is precluded from dating the engagement report until notification has been received from the engagement quality reviewer in accordance with paragraph 27 that the engagement quality review is complete; and (Ref: Para. A25‑A26)
  3. Circumstances when the nature and extent of engagement team discussions with the engagement quality reviewer about a significant judgement give rise to a threat to the objectivity of the engagement quality reviewer, and appropriate actions to take in these circumstances. (Ref: Para. A27)

25

In performing the engagement quality review, the engagement quality reviewer shall: (Ref: Para. A28–A33)

  1. Read, and obtain an understanding of, information communicated by: (Ref: Para. A34)
    1. The engagement team regarding the nature and circumstances of the engagement and the entity; and
    2. The firm related to the firm’s monitoring and remediation process, in particular identified deficiencies that may relate to, or affect, the areas involving significant judgements made by the engagement team.
  2. Discuss with the engagement partner and, if applicable, other members of the engagement team, significant matters and significant judgements made in planning, performing and reporting on the engagement. (Ref: Para. A35–A38)
  3. Based on the information obtained in (a) and (b), review selected engagement documentation relating to the significant judgements made by the engagement team and evaluate: (Ref: Para. A39‑A43)
    1. The basis for making those significant judgements, including, when applicable to the type of engagement, the exercise of professional scepticism by the engagement team;
    2. Whether the engagement documentation supports the conclusions reached; and
    3. Whether the conclusions reached are appropriate.
  4. For audits of a financial report, evaluate the basis for the engagement partner’s determination that relevant ethical requirements relating to independence have been fulfilled. (Ref: Para. A44)
  5. Evaluate whether appropriate consultation has taken place on difficult or contentious matters or matters involving differences of opinion and the conclusions arising from those consultations. (Ref: Para. A45)
  6. For audits of financial reports, evaluate the basis for the engagement partner’s determination that the engagement partner’s involvement has been sufficient and appropriate throughout the audit engagement such that the engagement partner has the basis for determining that the significant judgements made and the conclusions reached are appropriate given the nature and circumstances of the engagement. (Ref: Para. A46)
  7. Review:
    1. For audits of financial reports, the financial reports and the auditor’s report thereon, including, if applicable, the description of the key audit matters; (Ref: Para. A47)
    2. For review engagements, the financial report or financial information and the engagement report thereon; or (Ref: Para. A47)
    3. For other assurance and related services engagements, the engagement report, and when applicable, the subject matter information. (Ref: Para. A48)

26

The engagement quality reviewer shall notify the engagement partner if the engagement quality reviewer has concerns that the significant judgements made by the engagement team, or the conclusions reached thereon, are not appropriate. If such concerns are not resolved to the engagement quality reviewer’s satisfaction, the engagement quality reviewer shall notify an appropriate individual(s) in the firm that the engagement quality review cannot be completed. (Ref: Para. A49)

Completion of the Engagement Quality Review

27

The engagement quality reviewer shall determine whether the requirements in this ASQM with respect to the performance of the engagement quality review have been fulfilled, and whether the engagement quality review is complete. If so, the engagement quality reviewer shall notify the engagement partner that the engagement quality review is complete.

Documentation

28

The firm shall establish policies or procedures that require the engagement quality reviewer to take responsibility for documentation of the engagement quality review. (Ref: Para. A50)

29

The firm shall establish policies or procedures that require documentation of the engagement quality review in accordance with paragraph 30, and that such documentation be included with the engagement documentation.

30

The engagement quality reviewer shall determine that the documentation of the engagement quality review is sufficient to enable an experienced practitioner, having no previous connection with the engagement, to understand the nature, timing and extent of the procedures performed by the engagement quality reviewer and, when applicable, individuals who assisted the reviewer, and the conclusions reached in performing the review. The engagement quality reviewer also shall determine that the documentation of the engagement quality review includes: (Ref: Para. A51–A53)

  1. The names of the engagement quality reviewer and individuals who assisted with the engagement quality review;
  2. An identification of the engagement documentation reviewed;
  3. The basis for the engagement quality reviewer’s determination in accordance with paragraph 27;
  4. The notifications required in accordance with paragraphs 26 and 27; and
  5. The date of completion of the engagement quality review.