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Quality Control Review

Quality Control Review. The Institute of Chartered Accountants of India. Presentation Agenda. International Scene Indian Scene Process of Quality Review Concluding Observations. IFAC – Quality Assurance. Mandatory for member bodies – March 31, 2005 Scope: Minimum - Listed Cos.

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Quality Control Review

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  1. Quality Control Review The Institute of Chartered Accountants of India

  2. Presentation Agenda • International Scene • Indian Scene • Process of Quality Review • Concluding Observations

  3. IFAC – Quality Assurance • Mandatory for member bodies –March 31, 2005 • Scope: Minimum - Listed Cos. • Adequate system of quality control • Compliance with the system • Adherence to professional, legal and regulatory requirements • Approach : Cycle Approach vs. Risk Based Approach

  4. IFAC : Quality-Assurance • Reporting • Designing of system • Compliance • Reasons for negative conclusions, if any • Recommendation for areas of improvement • Corrective and Disciplinary Action • To make appropriate correction • Repeated failure demonstrate compliance - Appropriate disciplinary action

  5. Special Features of Indian Quality Review* • An independent quality review board • Nomination of Reviewers at the discretion of the Board • No Disciplinary Action • An exercise of quality enhancement * In India, the nomenclature is “Peer Review”

  6. Objectives • Assessing the maintenance of Quality of Attestation Service Engagements performed by Practice Units through: • Compliance with Technical Standards; and • Existence of proper system (including documentation systems) • Adherence to statutory & regulatory requirements • Enhance reliance placed by users of financial statements

  7. Three Embedded Questions

  8. Question 1 Does the PU have a system of quality control for attestation services? Task Assess based on completed questionnaire developed by the Institute and initial meeting with PU

  9. Question 2 Is it designed to ensure compliance with Technical Standards and maintenance of quality attestation work? Tasks • Review of general controls: • Independence • Maintenance of skills • Outside consultation • Staff supervision and development • Office administration

  10. Question 3 Task Review of records:Compliance approachSubstantive approach Was it effective during the review period? • Six Key Controls • Audit Record Administration • Review & Evaluation of System of Internal Controls • Substantive Tests • Financial Statement Presentation • Audit Conclusion and • Audit Report

  11. Stages of Peer Review PricewaterhouseCoopers | 11

  12. Process…. • Preliminary report • Reply to report • Interim report • Final report • Confirmation of visit • Initial meeting • Compliance review • Review of records • Empanelment of reviewer • Selection of PU • Intimation to PU • Communication • Selection of sample • engagements Reporting Actual review Selection

  13. General Considerations Maintain strict confidentiality Ensure Independence Follow principles of Integrity and Objectivity Exercise Due Professional Care

  14. What is not intended • The Quality Review is not intended to be: • A source of new auditing standards • An opportunity to “second guess” another auditor’s judgments • A source of competitive information • An opportunity to put down a fellow professional or indulge in a “witch hunt”

  15. The Goal • Enhance Quality • Share Expertise • Instill Confidence • Build Image • Create Brand Value

  16. Thanks

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