PC/QC/NFRA

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4 Terms

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Peer review

  • Constituted by ICAI Council.

  • Objective: Ensure compliance with technical, professional, ethical standards and regulatory requirements in assurance assignments.

  • Focus: Proper systems, including documentation, to demonstrate the quality of assurance services.

  • Purpose: Enhance quality of professional work for reliable audit reports.

  • Peer Review: Examination of systems & procedures of the Practice Unit to ensure compliance with standards.

  • Process: After Peer Review, assurance engagement records are reviewed.

    • Outcome:

      • Unqualified report: A "Peer Review Certificate" is issued.

      • Qualified report: Reasons provided; follow-on review scheduled by the Board.

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Quality Review Board (QRB)

  • Set up by: Central Government (CG); members nominated by CG and ICAI Council.

  • Functions:

    • (a) Recommend to ICAI Council on quality of services by members.

    • (b) Review quality of services (including audit services) by members.

    • (c) Guide members to improve service quality and comply with statutory/regulatory requirements.

  • Audit Review: Statutory auditors are selected for audit quality review using a risk-based approach, reviewed by technical reviewers empanelled by QRB.

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National Financial Reporting Authority (NFRA)

  • Constituted under: Sec 132(1) of Companies Act, 2013.

  • Duties:

    • Monitor and enforce compliance with Accounting Standards (AS) and Auditing Standards (SA).

    • Oversee quality of services related to compliance with standards and suggest improvements.

  • Powers:

    • Monitor & enforce compliance with AS and SA under Sec 132(2).

    • Investigate auditors of certain companies under Sec 132(4).

QRB vs NFRA:

  • NFRA oversees audit quality for listed companies.

  • QRB reviews audit services for entities other than those covered under NFRA Rules and those referred by NFRA.

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Reviewers' Considerations – SQC 1

  • Compliance with professional standards, regulatory & legal requirements.

  • Significant matters raised for further review.

  • Consultations documented & conclusions implemented.

  • Need to revise work nature, timing, or extent.

  • Work performed supports conclusions & is properly documented.

  • Sufficient evidence obtained to support the report.

  • Objectives of engagement procedures achieved.