Pre 1: MODULE 2
Philippine Standards on Quality noncompliance with relevant ethical
Control 1 (PSQC1) requirements by members of the
1. The firm shall establish a System of engagement team.
Quality Control to provide it with The engagement partner shall form a
reasonable assurance that: conclusion on noncompliance with
a. The firm and its personnel comply with
independence requirements that apply to
professional standards and regulatory and
legal requirements the audit engagement
b. Reports issued by the firm or engagement
partners are appropriate in the 3. Acceptance and continuance of client
circumstances relationships and audit engagement
The engagement partner shall be satisfied
2. The firm shall establish and maintain a that appropriate procedures regarding the
system of quality control that includes acceptance and continuance of client
policies and procedures that address each relationships and audit engagements have
of the following ELEMENTS: been followed, and shall determine that
a. Leadership responsibility for quality conclusions reached in this regard are
within the firm appropriate.
b. Relevant ethical requirements
c. Acceptance and continuance of client 4. Human resources – assignment of
relationships and specific engagements engagement teams
d. Human resources The engagement partner shall be satisfied
e. Engagement performance that the engagement team, and any
f. Monitoring auditor’s experts who are not part of the
engagement team, collectively have the
3. The firm shall document its policies and appropriate competence and capabilities
procedures and communicate them to the to :
firm’s personnel. a. Perform the audit engagement in
accordance with professional standards
and applicable legal and regulatory
Philippine Standards on Auditing 220
requirement
(PSA 220)
b. Enable an auditor’s report that is
appropriate in the circumstances to be
1. Leadership responsibilities for quality
issued
audits
The engagement partner shall take
5. Engagement performance
responsibility for the overall quality on
The engagement partner shall take
each audit engagement to which the
responsibility for:
partner is assigned
a. The direction, supervision and
performance of the audit engagement in
2. Relevant ethical requirements
compliance with professional standards
Throughout the audit engagement, the
and applicable legal and regulatory
engagement partner shall remain alert,
requirements and the auditor’s report
through observation and making inquiries
being appropriate in the circumstances
as necessary, for evidence of
Pre 1: MODULE 2
b. Reviews being performed in accordance c. Conclusions reached regarding the
with the firms review policies and acceptance and continuance of client
procedures. relationships and audit engagements
d. The nature and scope of, and conclusions
c. The engagement team undertaking
resulting from, consultations undertaken
appropriate consultation on difficult or during the course of audit engagement.
contentious matters.
ENGAGEMENT QUALITY CONTROL
REVIEW
For audits of financial statements of listed entities,
and those other audit engagements, if any, for
which the firm has determined that an engagement
quality control review is required, the engagement
partner shall:
Determine that an engagement quality
control review has been approved
Discuss significant matters arising during
the audit engagement, including those
identified during the engagement quality
control review, with the engagement
quality control reviewer
Not date the auditor’s report until the
completion of the engagement quality
control review.
6. Monitoring
The engagement partner shall consider
the results of the firm’s monitoring
process as evidenced in the latest
information circulated by the firm and, if
applicable, other network firms and
whether deficiencies noted in that
information may affect the audit
engagement.
DOCUMENTATION
The auditor shall include in the audit
documentation:
a. Issues identified with respect to
compliance with relevant ethical
requirements and how they were resolved
b. Conclusions on compliance with
independence requirements that apply to
the audit engagement, and any relevant
discussions with the firm that support
these conclusions.
