TWSQM2 Engagement Quality Reviews

Status

Issued by Auditing and Assurance Standards Committee in Taiwan on 18 July, 2023

Summary

This Standard deals with:
(a) The appointment and eligibility of the engagement quality reviewer; and
(b) The engagement quality reviewer’s responsibilities relating to the performance and documentation of an engagement quality review.
An engagement quality review is an objective evaluation of the significant judgments made by the engagement team and the conclusions reached thereon. The engagement quality reviewer’s evaluation of significant judgments is performed in the context of professional standards and applicable legal and regulatory requirements. However, an engagement quality review is not intended to be an evaluation of whether the entire engagement complies with professional standards and applicable legal and regulatory requirements, or with the firm’s policies or procedures.
The firm or the engagement quality reviewer, as applicable, shall comply with each requirement of this Standard, unless the requirement is not relevant in the circumstances of the engagement.
The firm shall establish policies or procedures that:
(a) Require the assignment of responsibility for the appointment of engagement quality reviewers to an individual(s) with the competence, capabilities and appropriate authority within the firm to fulfill the responsibility.
(b) The responsibilities of the engagement partner in relation to the engagement quality review, including that the engagement partner is precluded from dating the engagement report until notification has been received from the engagement quality reviewer in accordance with Article 26 that the engagement quality review is complete; and
(c) Circumstances when the nature and extent of engagement team discussions with the engagement quality reviewer about a significant judgment give rise to a threat to the objectivity of the engagement quality reviewer, and appropriate actions to take in these circumstances.
In performing the engagement quality review, the engagement quality reviewer shall:
(a) Read, and obtain an understanding of, information communicated by:
      (i) The engagement team regarding the nature and circumstances of the engagement and the
           entity; and
     (ii) The firm related to the firm’s monitoring and remediation process, in particular identified
          deficiencies that may relate to, or affect, the areas involving significant judgments made by the
          engagement team.
(b) Discuss with the engagement partner and, if applicable, other members of the engagement team, significant matters and significant judgments made in planning, performing and reporting on the engagement.
(c) Based on the information obtained in (a) and (b), review selected engagement documentation relating to the significant judgments made by the engagement team and evaluate:
     (i) The basis for making those significant judgments, including, when applicable to the type of
          engagement, the exercise of professional skepticism by the engagement team;
    (ii)Whether the engagement documentation supports the conclusions reached; and
    (iii)Whether the conclusions reached are appropriate.
(d) For audits of financial statements, evaluate the basis for the engagement partner’s determination that relevant ethical requirements relating to independence have been fulfilled.
(e) Evaluate whether appropriate consultation has taken place on difficult or contentious matters or matters involving differences of opinion and the conclusions arising from those consultations.
(f) For audits of financial statements, evaluate the basis for the engagement partner’s determination that the engagement partner’s involvement has been sufficient and appropriate throughout the audit engagement such that the engagement partner has the basis for determining that the significant judgments made and the conclusions reached are appropriate given the nature and circumstances of the engagement.
(g) Review:
      (i) For audits of financial statements, the financial statements and the auditor’s report thereon,
           including, if applicable, the description of the key audit matters;
      (ii) For review engagements, the financial statements or financial information and the engagement
            report thereon; or
      (iii) For other assurance and related services engagements, the engagement report, and when
             applicable, the subject matter information.

Effective date

This Standard is effective for audits or review of historical financial information for reporting periods ending on or after December 31, 2023; and for other assurance and related services engagements of non-historical financial information that are accepted or continued on or after January 1, 2024.