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For a listed client, an engagement partner who has served for 7 years and now he is rotated for the 8th year..can’t be independent quality control reviewer for EQCR atleast for next two consecutive years. But why? Independent reviewer requirement is just that he should not be engaged in audit which is satisfied…He is not engaged in audit.
And also ..would he be allowed to become reviewer in case of non listed client ?
ThankyouThe Code says: “In respect of an audit of a public interest entity, an individual shall not be a key audit partner for more than seven years. After such time, the individual shall not be a member of the engagement team or be a key audit partner for the client for
two years. During that period, the individual shall not participate in the audit of the
entity, provide quality control for the engagement, consult with the engagement
team or the client regarding technical or industry specific issues, transactions or
events or otherwise directly influence the outcome of the engagement.”You ask why. Imagine you were the engagement partner for 7 years until 31 Dec 2017. The comparatives/corresponding amounts in the 2018 financial statements are the 2017 financial statements that you audited – including the opening position of the 2017 accounts which was the closing position of the 2016 accounts which you also audited. Could you be independent (in appearance as well as of mind) if you were the EQC reviewer? Answer – no.
If an audit is not of a PIE but requires an EQCR for some other reason (e.g. high risk) it would rather defeat the object if the same principle did not apply.
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