Internal control includes all policies and procedures adopted by the management of an entity to assist in achieving management objective of ensuring, as far as practicable, the orderly and efficient conduct of its business. Quality control procedures represent internal controls applied to audit firms and individual audits. The objective of quality control in auditing is to provide the partners a reasonable assurance that services have been provided in compliance of International Standards on Auditing and ethical standards.

Quality control review has been made mandatory by the Institute of Chartered Accountants of Pakistan. The reviewer is required to complete quality control checklist. The findings of the reviewer are presented to the Council. At present the program is only educational and not punitive.

In US the “peer review” which involves engagement of another auditing firm to carry out a detailed review of all quality control procedures is mandatory for public audits.

In UK, the peer review is voluntary and therefore the practice is not
widely used.


Compliance of quality control standard will necessitate establishing procedures relating to:

  1. Staff recruitment.
  2. Qualification and experience requirements for evaluating new staff.
  3. Communication to the new personnel of the firm’s policies an procedures.
  4. Continuing professional development, regarding technical standards and firm’s audit approach.
  5. Firm’s needs to expertise in specialized areas.
  6. Staff evaluation and promotion.
  7. Determining the time budgets for the whole year to assess staff requirements.
  8. Identifying a person in the firm to be responsible for assigning personnel to audits.
  9. Procedures for planning the audit.
  10. Procedures for maintaining the firm’s standards.
  11. On-job training during the audit.
  12. Areas where consultation is required.
  13. Individuals or firms for specialized areas.
  14. Extent of documentation to be provided for the results of consultation.
  15. Procedures for evaluation of prospective clients and for their approval as clients.
  16. Evaluation of clients upon major changes in organization nature of business, and scope of engagement Scope and contents for firm’s monitoring procedures.
  17. Reporting findings to the partners for monitoring actions.

Posted on November 2, 2015 in Quality Control for an Audit of Financial Statements

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