ISQC 1: Quality Control Arrangements
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Questions and Answers

What is the purpose of monitoring quality control procedures in an audit firm?

To evaluate the effect of any deficiencies found and determine if they indicate a failing in the firm's quality control system.

Who should be responsible for monitoring quality control procedures?

A partner or other appropriate person with sufficient experience and authority.

What should be included in an annual report for partners regarding quality control procedures?

The monitoring procedures performed, the conclusions drawn, and any systematic deficiencies found, and remedial action taken.

Why is it important to document quality control procedures?

<p>To provide evidence of the operation of each element of the system of quality control.</p> Signup and view all the answers

What should be done with deficiencies found during monitoring?

<p>Evaluate the effect of any deficiencies found, communicate them to relevant personnel, and take appropriate remedial action.</p> Signup and view all the answers

Who should perform monitoring reviews (cold reviews) in an audit firm?

<p>Someone not involved with the engagement or the engagement quality control review.</p> Signup and view all the answers

What is the purpose of consultation in an audit engagement?

<p>To ensure that appropriate consultation takes place on difficult or contentious matters.</p> Signup and view all the answers

What should be included in the procedures for dealing with differences of opinion?

<p>Procedures for dealing with any differences of opinion between the engagement team and those consulted or between the engagement partner and the engagement quality control reviewer.</p> Signup and view all the answers

What is the ultimate responsibility for quality control policies and procedures according to ISQC 1?

<p>The firm’s CEO (or equivalent) or managing board of partners (or equivalent)</p> Signup and view all the answers

What is the primary purpose of the firm's policies and procedures on independence according to ISQC 1?

<p>To identify and evaluate circumstances and relationships that create threats to independence</p> Signup and view all the answers

What is required of staff members at least annually according to ISQC 1?

<p>To provide written confirmation of compliance with the firm's policies and procedures on independence</p> Signup and view all the answers

What should the firm establish to address the acceptance and continuance of engagements according to ISQC 1?

<p>Policies and procedures</p> Signup and view all the answers

What is the primary objective of the firm's quality control arrangements according to ISQC 1?

<p>To promote an internal culture recognising that quality is essential</p> Signup and view all the answers

Who should be notified of breaches of independence according to ISQC 1?

<p>The engagement partner and other relevant staff</p> Signup and view all the answers

What should the firm establish to address human resources according to ISQC 1?

<p>Policies and procedures</p> Signup and view all the answers

What should the firm establish to address engagement performance according to ISQC 1?

<p>Policies and procedures</p> Signup and view all the answers

What is the primary reason why audit firms need to have a strong system of quality control?

<p>To satisfy the professional requirements for due skill and care and technical competence.</p> Signup and view all the answers

What is one of the consequences of poor audit work?

<p>Legal damages and legal costs.</p> Signup and view all the answers

What area of auditing has the greatest number of audit issues?

<p>Accounting estimates.</p> Signup and view all the answers

What is the purpose of quality control procedures in an audit firm?

<p>To reduce the risk of issuing an incorrect audit opinion and being sued for negligence.</p> Signup and view all the answers

What level of the audit firm is responsible for implementing quality control procedures?

<p>The audit firm as a whole.</p> Signup and view all the answers

What standard is relevant to quality control procedures in an audit firm?

<p>ISQC 1.</p> Signup and view all the answers

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