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    Engagement Quality Reviews: A Comparison of Audit Firm...
    research summary posted April 16, 2012 by The Auditing Section, last edited May 25, 2012, tagged 05.0 Audit Team Composition, 05.06 Qualifications of Engagement Quality Reviewers, 11.0 Audit Quality and Quality Control, 11.02 Engagement Quality Review – Processes and Effectiveness 
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    Title:
    Engagement Quality Reviews: A Comparison of Audit Firm Practices
    Practical Implications:

    Engagement quality review is one quality control mechanism used by public accounting firms to monitor the quality of audit engagements. In this study, the authors analyzed the concurring partner review process by reviewing six firms’ concurring partner review guidance. The authors argue that the analysis of this study provides a base for the PCAOB in setting its standard for engagement quality review.

    Citation:

    Epps, Kathryn K.and W.F. Messier, Jr. 2007. Engagement Quality Reviews: A Comparison of Audit Firm Practices. Auditing: A Journal of Practice & Theory 26 (2): 167-181.

    Keywords:
    Concurring partner review, engagement quality review.
    Purpose of the Study:

    Engagement quality (EQ) review, formerly called concurring partner review, is an important part of the audit review process. It is one quality control mechanism used by public accounting firms to monitor the quality of audit engagements. Concerns about the effectiveness of existing firm EQ review practices have led to increased partner sanctions by the SEC. In addition, SOX directs the PCAOB to develop an auditing standard on engagement quality review. Due to the structure of the current requirements, the authors note that there is the possibility for some variation for the concurring partner review and subsequent documentation across firms. In this study, the authors have two primary objectives: 

    • To determine the consistency of concurring partner (engagement quality) guidance included in the auditing manuals of the major public accounting firms. 
    • To conduct a task analysis of engagement quality reviews in order to develop research questions for future investigations.
    Design/Method/ Approach:

    The authors requested (in 1999) and subsequently collected firm guidance from the Big 4 and two of the next three largest U.S. firms specifically related to their engagement quality review process and documentation.  The data was provided by partners with “senior positions” at each firm as well as extensive experience with concurring reviews. Once the firm guidance was received (in roughly 2002), it was coded by attributes then returned to the firm for a review of the coding. Then each firm was asked to have an experienced concurring partner complete a short questionnaire that requested additional information or clarifying questions.

    Findings:
    • The results show a moderate level of consistency across the firms in regards to their policies surrounding engagement quality reviews. 
    • Differences identified among firms relate to:
      • The assignment of concurring partners to audit engagements.
      • The participation of the concurring partner in audit planning.
      • The content and extensiveness of practice aids available to concurring partners.
      • The involvement of concurring partners during the course of the audit engagement.
    • The authors find that the firms surveyed comply with the existing required regulation in all cases.  However, it was noted that some firms require practices above and beyond the current standards. 
    Category:
    Audit Team Composition, Audit Quality & Quality Control
    Sub-category:
    Qualifications of Engagement Quality Reviewers, Engagement Quality Review – Processes & Effectiveness
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