NFRA in its recent order dated 26.09.2023 emphasized the duty of an EQC Reviewer to conduct the review of the work of the ET and ensure that the Independent Auditor’s Report is appropriate. As per NFRA, without a credible audit, investors, creditors, and other users of Financial Statements would be handicapped. The entire corporate governance system would fail and result in a breakdown in trust and confidence of investors and the public at large if the auditors do not perform their job with professional scepticism and due diligence and adhere to the standards.
a) EQC Reviewer had an experience of a little more than 2 (Two) years when he took up his assignment as EQC Reviewer for the statutory audit of company for which the EP, had an experience of 32 (Thirty-Two) years as a Chartered Accountant, thereby violating the provisions of SA 220 and SQC l.
b) EQC Reviewer failed to review work papers related to significant areas of audit, review the independence of the audit firm, and maintain review documentation.
c) NFRA jurisdiction not just include engagement partner but also EQC Reviewer.
d) Non-compliance with provisions of firm’s Quality Control Manual in the matter of EQC Review assignment.
EQC Reviewer was held guilty of professional and other misconduct in terms of his obligation and responsibilities set out in the relevant paras of SA 220 read with SQC 1 and imposes a monetary penalty of Rs. 1,00,000/- (Rupees One Lakh) upon EQC Reviewer and debarment of 1 year (One year) from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.
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