University Assignment: ASA 220 Quality Control in Auditing

This report summarizes the key highlights and requirements of ASA 220, the auditing standard focusing on Quality Control for the Audit of the financial statement. Issued by the IAASB, the standard establishes responsibilities related to quality control procedures for auditing financial reports. The report details the responsibilities of engagement partners, ethical requirements, performance expectations, and monitoring processes. It covers the application of ASA 220 to financial year and half-yearly audits, as per the Corporation Act 2001, and other historical financial information. The report emphasizes the audit firm's responsibility for quality control systems, engagement team roles, and the importance of auditor independence. It outlines the requirements for engagement partners to ensure audit quality, including supervision, review, and consultation, as well as proper documentation and monitoring to provide reasonable assurance in compliance with the Australian Auditing Standards.

Running Head: AUDITING & ASSURANCE
AUDITING & ASSURANCE
Name of the Student
Name of the University
Author Note

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Table of Contents
Key Highlights of ASA 220.......................................................................................................2
Reference....................................................................................................................................6

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Key Highlights of ASA 220
The auditing standard ASA 220 for Quality control for the Audit of the financial
statement is issued by IAASB that is an independent board of standard setting of the IFA.
The auditing standard has the objective for establishing the requirements and it provides the
applications as well as other explanatory materials that deal with the auditors’ responsibilities
in respect of the procedures of the quality control for auditing of the financial reports as well
as other historical financial information. Moreover, it also helps in addressing responsibilities
of quality control receiver engagement, where applicable (Legislation.gov.au. 2019).
Quality Control for an Audit of the Financial Report & Other Historical Financial
Information
The auditing standard helps in establishing the responsibilities of leadership of
engagement partner for the quality audits. It explains the relevant requirements of ethics by
setting the assignment for engagement team in order to audit the engagement. Moreover, it
sets out the performance requirements of the engagement that includes quality control
reviews, supervision reviews as well as consultations. It explains the process of the
monitoring for the compliance with the system of quality control by establishing the
requirements of documentation that is related to the quality control for the engagement of
audit that includes those which is related to quality control reviewer of engagement (Ottaway
2014).
The application of this particular auditing standard is to the auditing of the financial
report of the financial year or the financial report audit for half yearly according to the
Corporation Act 2001 and the auditing of the other historical financial information. This
standard helps in dealing with the auditor’s specific responsibilities regarding the procedures
of the quality control for financial report audit as well as other historical financial

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information. It reads in the conjunction with the relevant requirements of ethics (Carey,
Monroe and Shailer 2014).
Quality Control System and Engagement Teams Role
The audit firm has the responsibility of the policies and procedures as well as systems
of quality control. For providing with the reasonable assurances, the company has the
obligation for establishing as well as maintaining the quality control system for providing it
with the reasonable assurances. Moreover, the responsibility of the teams of the engagement
is for implementing the procedures of the quality control, which are applicable to the
engagement of audit as well as providing the firm with the relevant information for enabling
functionality of the part of system of firms quality control that are in relation to the
independence. The teams of engagement are entitled for relying on the quality control system
of the firm, until and unless the information, which is provided by the entity or the other
parties otherwise suggests (Ottaway 2014).
The auditors should have the objective for implementation of the procedures of the
quality control at the level of engagement, which helps in providing the auditor with the
reasonable assurances. The audit could complies with the Australian Auditing Standards,
applicable requirements of the laws and regulatory and the issued report of the auditor should
be appropriate in circumstances (Chi and Ziebart 2017).
Requirements of ASA 220
The partner of engagement has to take the desired responsibilities for the quality that
is overall on each of the engagement of audit for which the partner is being assigned. The
engagement partner in their throughout audit engagement have to be alert by making
enquiries as well as observation as and when necessary, in case of the evidences of not
complying with the relevant requirements of ethics by the engagement team members. If this

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type of ethical issues comes to the attention of ethical partner by the quality system control of
the entity then it indicates that the engagement team members have not complied with the
required relevant ethical requirements and then by consulting with others in entity, the
engagement partner should take the action that is appropriate in the situation (Sanderson
2014).
The engagement partner needs to be satisfied on the fact that the team of the
engagements as well as the experts of auditors possesses collectively, the capabilities as well
as competencies for performing the audit engagement, according with the applicable law and
requirements of regulatory, relevant requirements of ethics as well as Australian Auditing
Standards. Moreover, they should also enable the issued report of the auditor, which is
appropriate in the given circumstances. Further, the engagement partner should take the
responsibility for direction, performance and supervision, reviews, consultations, review of
engagement quality control as well as differences in the opinion (Collings 2014).
The quality control system effectiveness is comprises of the process of monitoring for
providing the entityswith the reasonable assurances that their procedures as well as policies
related to the quality control system are effectively operating, relevant as well as adequate.
There should be consideration by the engagement partner regarding the outcomes of the
process of monitoring of the firm, which is shown in latest circulated information of firm.
Apart from this, there should be proper documentation by the auditor regarding the
compliance issues, conclusion on compliance, conclusion on continuation of audit
engagements and client relationships as well as documents of the reviewed audit
engagements (Ocak and Ozden 2018).
Hence, it can be said that the auditing standard ASA 220 helps in dealing with the
responsibilities for establishing as well as maintaining the quality control system for the

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engagement of audit. Moreover, the quality control system includes the procedures as well as
policies, which address the elements such as the responsibilities of leadership for the quality
in the entity, ethical requirements that are relevant such as continuance and acceptances of
the client relationship and the specific engagements, human resources, performances of
engagements and lastly monitoring (Miah 2017).

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Reference
Carey, P.J., Monroe, G.S. and Shailer, G., 2014. Review of Post‐CLERP 9 Australian Auditor
Independence Research. Australian Accounting Review, 24(4), pp.370-380.
Chi, Y.H. and Ziebart, D.A., 2017. Audit quality and attributes of management earnings
forecasts. Review of Accounting and Finance, 16(4), pp.406-423.
Collings, S., 2014. Frequently asked questions in International standards on auditing. John
Wiley & Sons.
Legislation.gov.au. (2019). ASA 220 - Quality Control for an Audit of a Financial Report and
Other Historical Financial Information - October 2009. [online] Available at:
https://www.legislation.gov.au/Details/F2017C00908 [Accessed 6 Aug. 2019].
Miah, M.S., 2017. Accounting standards complexity, audit fees and financial analyst
forecasts in Australia: a thesis submitted in fulfilment of the requirements for the degree of
Doctor of Philosophy in Accounting at Massey University, Albany, New Zealand (Doctoral
dissertation, Massey University).
Ocak, M. and Ozden, E.A., 2018. Signing Auditor-Specific Characteristics And Audit Report
Lag: A Research From Turkey. Journal of Applied Business Research, 34(2), p.277.
Ottaway, J., 2014. IMPROVING AUDITOR INDEPENDENCE IN AUSTRALIA: IS
‘MANDATORY AUDIT FIRM ROTATION’THE BEST OPTION?.
Sanderson, J., 2014. Audit issues. SMSF Guide: Current Issues and Strategies for the Self-
Managed Superannuation Funds Adviser, p.377.