Is quality management review only required for listed companies? And for non-listed companies it is upto the auditor if he thinks it is necessary or not?
Ask the Tutor ACCA AA
Quality management review
Chapter 24 at the top of page 112:
"5.4 Engagement Quality (EQ) Review
Public interest audits, such as the audit of listed companies, should [i.e. must] undergo an Engagement Quality (EQ) Review."
So it is a requirement for the audit of public interest entities that are not listed companies - e.g. non-listed financial institutions.
At the bottom of the same page it says:
"An audit firm may choose to carry out reviews ('hot' or 'cold') where an EQ review is not required."
You don't need any more detail on this for AA because ISQM 1 is not examinable - but in the QM Chapter for AAA it says:
"An audit firm should set criteria for other engagements, if any, that require an EQ review (eg entities in certain industries identified as high risk)."
A firm may have a policy of carrying out an EQ review on new audit clients, for example.
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