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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?
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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