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Auditing Assignment - PL0-5

The document discusses the meaning of a "system of quality control" according to the International Standard of Auditing ISA-220. It states that such a system provides reasonable assurance that an auditing firm's personnel are complying with professional and ethical standards. It also lists the key elements that a firm's quality control policies should encompass, such as independence, integrity, personnel management, client acceptance, engagement performance, and monitoring. The document also discusses the need for a Quality Control Review conducted by the Institute of Chartered Accountants of Pakistan. It explains that the purpose is to determine if an audit organization has an effective internal quality control system and is following applicable auditing standards. It lists additional factors the reviewer should

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33 views2 pages

Auditing Assignment - PL0-5

The document discusses the meaning of a "system of quality control" according to the International Standard of Auditing ISA-220. It states that such a system provides reasonable assurance that an auditing firm's personnel are complying with professional and ethical standards. It also lists the key elements that a firm's quality control policies should encompass, such as independence, integrity, personnel management, client acceptance, engagement performance, and monitoring. The document also discusses the need for a Quality Control Review conducted by the Institute of Chartered Accountants of Pakistan. It explains that the purpose is to determine if an audit organization has an effective internal quality control system and is following applicable auditing standards. It lists additional factors the reviewer should

Uploaded by

muhammadnavairinamdar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Qs.

1 i) Referring to the International Standard of Auditing ISA-220, discuss the meaning


of ‘a System of Quality Control’.

Ans. 1 i) A system of quality control is defined as a process that is introduced to provide the
auditing firm with the reasonable assurance that its personnel are complying with applicable
professional and ethical standards and are in line with the firm’s standard of quality.

As per ISA 220 the firm’s policies should encompass the following elements to make sure
standards of accounting and auditing are being met:

1. Independence, Integrity, and Objectivity


2. Personnel Management
3. Acceptance and Continuance of Clients and Engagements
4. Engagement Performance
5. Monitoring

ii. Discuss the need and role of Quality Control Review (QCR) conducted locally by the
Institute of Chartered Accountants of Pakistan (ICAP).

Ans. 1 ii) The need of a Quality Control Review which is conducted locally by the Institute of
Chartered Accountants of Pakistan is to determine whether an audit organization's internal
quality control system is in place and operating effectively, and to provide assurance that
established policies and procedures and applicable auditing standards are being followed.

For audits of financial statements of listed entities, the engagement quality control reviewer, on
performing an engagement quality control review, shall also consider the following:

1. The engagement team’s evaluation of the firm’s independence in relation to the audit
engagement;
2. Whether appropriate consultation has taken place on matters involving differences of
opinion or other difficult or contentious matters, and the conclusions arising from those
consultations; and
3. Whether audit documentation selected for review reflects the work performed in relation
to the significant judgments and supports the conclusions reached.

Qs. 2 Make a Comparative analysis of the Code of Ethics and conduct of the following
Local and International institutions:
[Try to find a few similarities, differences, and any point of focus in their codes].

University setting:
i. Local University student Code of Conduct: IBA
ii. International University Code of Conduct (choose one from this): Harvard or Oxford
1. Similarities
There were codes of ethics in both IBA and Harvard that outlined policies and procedures
regarding harassment and bullying and another detailed section on prohibition of smoking on
campus. Policies on false representation and misrepresentation of identity are present and are
discouraged.
2. Differences
Although Harvard mentioned anti smoking policies it also detailed policies against illicit
substances and hazing. The term hazing was clearly defined as per law and the implications of
doing so. IBA and Harvard both have policies and codes regarding relationships on campus but
the difference is that IBA strictly discourages any form of physical contact on campus whereas
Harvard’s policy focuses more on the student-teacher relationship and strictly discourages it
while also giving an explanation as to why (the power imbalance created).

Professional bodies:
iii. Local Professional bodies - Code of Ethics (choose one from this): ICAP or ICMAP
iv. International Professional bodies - Code of Ethics (choose one): ACCA or CIMA

Although there are no differences in the international and local professional bodies which I
considered (ICAP and ACCA) there was a consistent recurrence identified which was the
replacement of the word “Professional accountants” in Code of Ethics of ACCA with “chartered
accountants” in the Code of Ethics of ICAP. Other than that the policies were consistent and
similar.

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