AAA March/June 2021

If the examiner wants candidates to write about named standards, that will be explicitly stated (but very very rarely at this level).

When you get a question about “substantive procedures” – you might think ISA 330, ISA 500, etc …. but you don’t write about the standards – you apply them. A question about quality control is no different.

The Q says “…. quality of the planning and performance of the Group audit ….” ISQM 1 is therefore irrelevant (as that is “firm-level” procedures). You might take IDEAS from the other standards – but you have to focus on what is relevant … “PLANNING and PERFORMANCE”.

Look at my summary on page 50 about “engagement level” – in the list of the engagement partner’s responsibilities:

? Engagement performance, including:
? Direction, supervision and performance of the audit in accordance with ISAs
? Review of audit documentation
? Appropriate consultation, where appropriate …

These are the things at the heart of “audit quality” – was there adequate direction? supervision? Read the scenario for clues/evidence/any suggestion that the wrong level of audit staff was assigned the wrong tasks/did not understand what they were doing/made a “wrong call” in the light of the evidence. If there is a specific ISA relevant to something described in the scenario e.g. Exhibit 4 describes an instance of NOCLAR – so ISA 250 is relevant – did the engagement partner/audit team do what they were supposed to do in that situation?

Aspects of “audit quality” include:
(i) Performing work that complies with professional standards and applicable legal and regulatory requirements;
(ii) Complying with the firm’s quality control policies and procedures as applicable;
(iii) Issuing auditor’s reports that are appropriate in the circumstances; and
(iv) The engagement team’s ability to raise concerns without fear of reprisals.

(i) is most likely to be relevant in the exam – note that “professional standards” isn’t just ISAs – there could be ethical issues – e.g. if it transpired that audit work had been performed by someone who should have been excluded from the audit team due to some threat to objectivity.

You’re welcome!