Wiley Practitioner's Guide to GAAS 2015: Covering all SASs, SSAEs, SSARSs, PCAOB Auditing Standards, and Interpretations

PCAOB 7 Engagement Quality Review¹

APPLICABILITY

This section applies to audit engagements and engagements to review interim financial information conducted pursuant to Public Company Accounting Oversight Board (PCAOB) standards.

DEFINITIONS OF TERMS

Significant engagement deficiency. An audit condition that exists when an engagement team does not obtain sufficient evidence, it reached an inappropriate conclusion on the subject matter, the engagement report is not appropriate, or the firm is not independent of its client.

Significant risk. A risk of material misstatement that is important enough to require special audit consideration.

OBJECTIVES OF PCAOB STANDARD 7

PCAOB Auditing Standard 7 addresses the judgments made by an engagement team in forming an overall conclusion on an engagement quality review and in preparing the resulting report.

FUNDAMENTAL REQUIREMENTS

Qualifications of an Engagement Quality Reviewer

An auditor engaged in an engagement quality review must possess the following characteristics:

• Be associated with a registered public accounting firm

  NOTE: The quality reviewer from the firm issuing the engagement report must be a partner or someone in an equivalent position. Anyone who was the engagement partner during either of the two audits preceding the audit that is subject to the quality review cannot be the engagement quality reviewer.

• Have competence, which is considered to be a sufficient level of knowledge to be the engagement partner on ...