Document ID: chunk:federal_register_of_legislation:F2023C01116:body:0:p12
Version: federal_register_of_legislation:F2023C01116
Segment Type: other
Provision Reference: 
Character Range: 33148–36274

inappropriately influence the outcome of the engagement quality review. In some cases, the engagement quality reviewer's authority may be enhanced by the firm's policies or procedures to address differences of opinion, which may include actions the engagement quality reviewer may take when a disagreement occurs between the engagement quality reviewer and the engagement team.

A10.         The authority of the engagement quality reviewer may be diminished when:

           * The culture within the firm promotes respect for authority only of personnel at a higher level of hierarchy within the firm.

           * The engagement quality reviewer has a reporting line to the engagement partner, for example, when the engagement partner holds a leadership position in the firm or is responsible for determining the compensation of the engagement quality reviewer.

Public Sector Considerations

A11.         In the public sector, an auditor (e.g., an Auditor General, or other suitably qualified individual appointed on behalf of the Auditor General) may act in a role equivalent to that of the engagement partner with overall responsibility for public sector audits. In such circumstances, the selection of the engagement quality reviewer may include consideration of the need for independence and the ability of the engagement quality reviewer to provide an objective evaluation.

Relevant Ethical Requirements (Ref: Para. 13(c), 18(b))

A12.         The relevant ethical requirements that are applicable when undertaking an engagement quality review may vary, depending on the nature and circumstances of the engagement or the entity. Various provisions of relevant ethical requirements may apply only to individual members, such as an engagement quality reviewer, and not the firm itself.

A13.         Relevant ethical requirements may include specific independence requirements that would apply to individual members, such as an engagement quality reviewer. Relevant ethical requirements may also include provisions that address threats to independence created by long association with an audit or assurance client. The application of any such provisions dealing with long association is distinct from, but may need to be taken into consideration in applying, the required cooling-off period in accordance with paragraph 19.

Threats to the objectivity of the engagement quality reviewer

A14.         Threats to the engagement quality reviewer's objectivity may be created by a broad range of facts and circumstances. For example:

           * A self-review threat may be created when the engagement quality reviewer previously was involved with significant judgements made by the engagement team, in particular as the engagement partner or other engagement team member.

           * A familiarity or self-interest threat may arise when the engagement quality reviewer is a close or immediate family member of the engagement partner or another member of the engagement team, or through close personal relationships with members of the engagement team.

           * An intimidation threat may be created when actual