News & Updates

Firm’s Quality Control Policies

Aug 10, 2020

Independence:-

The Code of Ethics for Professional Accountants, prepared by the International Federation of Accountants (IFAC) identifies types of threats to independence
These are the followings:-

  • Self-interest threats;
  • Self-review threats;
  • Advocacy threats
  • Familiarity threats;
  • Intimidation threats.

The firm advises the following principles to the managing partner, engagement partner, quality control partner and engagement team members to safeguard against the aforesaid threats:-

  • Always be and appears to be independent of the entities that they are performing professional services;
  • Inculcate integrity, objectivity and professional scepticism while performing professional services;
  • Diligently consider whether it involves threats to his independence;
  • Compliance of provisions of Companies Act, 2013; and
  • Follow Provisions contained under the Chartered Accountants Act, 1949, Chartered Accountants Regulations, 1988 and under Code of Ethics.

The firm also takes declaration for Independence as suggested in SQC-1 from the team members that he or immediate family members or other entities in which they have direct or indirect interest:-

  • Do not have transactions related to Investments, borrowings and any other financial transactions with the entity or to an officer, director or major shareholder of that entity and group entry to whom any assurance services are rendered by the M/s. Mehra Goel & Co;
  • Do not hold a position as an executor, administrator, or trustee of a trust/estate, and do not have authority to make investment decisions for the trust/estate;
  • Do not associate with an entity or an officer, director or major shareholder of that entity and group entity to whom any assurance services are rendered by the M/s. Mehra Goel & Co;
  • Do not obtain a new, or make significant changes to an existing, insurance product of any kind from an entity or from an officer, director or major shareholder of that entity and group entity to whom any assurance services are rendered by the M/s. Mehra Goel & Co;
  • Do not have a business relationship with or joint investment (e.g., partnership interests) in an entity or with an officer, director or major shareholder of that entity and group entity to whom any assurance services are rendered by the M/s. Mehra Goel & Co; and
  • Do not negotiate employments offer with the entity or an officer, director or major shareholder of that entity and group entity to whom any assurance services are rendered by the M/s. Mehra Goel & Co

 In case of any ethical threat in any specific case, safeguards, as prescribed in terms of the professional code of ethics, are adopted.

Integrity

  • Straightforward and honest in our professional and business relationships; and
  • Truthful about the services provided, the knowledge, and the experience.

Objectivity

  • Do not allow bias, conflict of interest, or undue influence of others to override our professional judgments; and
  • Address differences of opinion and handle them constructively and professionally

Engagement Performance:-

The Firm ensures that the engagement is performed, supervised, documented, reported and communicated in accordance with the requirement of professional standards, applicable regulators. The same is ensured through the following:

  • Ensuring those relevant auditing standards such as those dealing with risk assessment, fraud, etc. that deal with the planning phase of engagement are duly complied with
  • Providing adequate supervision during the course of an engagement, including briefing the engagement team on the objectives of their work. The training, ability, and experience of the personnel are considered when assigning supervisors to the engagement. Requiring that a written work program be used and monitored for all
    engagements
  • Requiring that there is consistency in the quality of engagement performance. Consistency may be accomplished through written or electronic manuals, software tools, checklists, templates, models or other forms of standardized documentation, and industry or subject matter-specific guidance material.
  • Requiring that a suitable audit summary memorandum is documented and kept among the engagement working papers to provide a history of the planned risks (including fraud risks), by what audit procedures those risks were mitigated, conclusions on controls and substantive testing, and whether the extent and quality of audit evidence examined to support the audit opinion.
  • Addressing significant issues and newly identified risks arising during the engagement, considering their significance, and appropriately modifying the planned approach.
  • Requiring engagement documentation in accordance with professional standards, applicable regulatory requirements, and the Firm’s policies. 

Personnel Management

Policies to maintaining the quality of firm’s work:

The Firm determines capabilities and competencies required for an  engagement at me of starting of the assignment

The allocation of team members are based on risk and competence require for the assignments so that team members assume the responsibility to act on an assignment carefully, thoroughly and on a timely basis

The allocation criteria also include the following:

  • The role of the Firm’s system of QC and the Code of Ethics issued by the ICAI in ensuring the integrity of the accounting, auditing, and attest functions to users of reports;
  • The professional standards applicable to the engagement and the industry in which the client operates. Such standards include accounting, auditing, and attestation standards, and relevant accounting and auditing framework applicable to the engagement as well as rules and regulations issued by applicable regulators; and
  • The skills that contribute to sound professional judgment, including the ability to exercise professional scepticism.
  • How the auditee uses information technology and the manner in which information systems are used to record and maintain financial information.

Professional competence and due care-

The firm has established certain criteria for recruitment of Staff and Article Assistant in a manner so that it can achieve quality control policies designed to meet the highest standard of the profession under the supervision of Managing partner

The firm also conducts education seminars and encourages personnel to attend for knowledge enhancement and quality improvement of the personnel.

Aforesaid steps again and maintain staff’s professional knowledge and skills at the level required to ensure that the clients receive competent professional services and they act diligently while providing professional services.

The allocation of team members are based on risk and competence require for the assignments so that team members assume the responsibility to act on an assignment carefully, thoroughly and on a timely basis.

The firm evaluates written engagement leer duly signed by authorized signatories of the client for beer understanding of the services to be performed especially regarding the nature, scope and limitations of the services to be performed. Based on evaluation, the firm assigns responsibility to engagement partner who has the appropriate capabilities, competence, authority, and me to perform the role. The firm also monitors the workload and availability of engagement partners to enable these individuals to have sufficient me to adequately discharge their responsibilities.

The firm executes the same through the following

  • Designating an individual in the Firm to be responsible for the following activities:
    • Managing the human resources function.
    • Evaluating the Firm’s personnel needs by considering factors such as existing clientele, anticipated growth, personnel turnover, and individual advancement.
    • Developing criteria for determining which individuals will be involved in the interviewing and hiring process
  • Establishing an understanding among the partners about the qualifications, attributes, achievements, and experiences desired in entry-level and experienced personnel.
  • Setting guidelines for the additional procedures to be performed when hiring experienced personnel, such as performing background checks and inquiring about any outstanding regulatory actions.
  • The firm determines the capabilities and competencies possessed by personnel by establishing criteria or evaluating personal characteristics such as integrity, competence and motivation and also evaluating the personnel at least annually to determine their capabilities and competences. Selection of the personnel also depends upon the past experiences and the performance evaluation, Nature of past assignments allocated to the personnel

Policies for hiring

The firm ensures that the personnel who are hired possess the required characteristics that enable them to perform competently. The firm executes the same through the following:

  • Designing an HR manager in the Firm to be responsible for the following activities:
    • Managing the human resources function;
    • Evaluating the Firm’s personnel needs by considering factors such as existing clientele, anticipated growth, personnel turnover, and individual advancement; and
    • Developing criteria for determining which individuals will be involved in the interviewing and hiring process 
  • Taking feedbacks from the partners about the qualifications, attributes, achievements, and experiences desired in entry-level and experienced personnel;
  • The firm established certain criteria for recruitment of Staff and Article Assistant in a manner so that it can achieve quality control policies designed to meet the highest standard of the profession under the supervision of Managing partner;
  • New Hiring is made through appropriate channels like ICAI Campus placement programs and reputed colleges;
  • The additional procedures to be performed when hiring experienced personnel, such as performing background checks and inquiring about any outstanding regulatory actions; and
  • The firm determines the capabilities and competencies possessed by personnel by establishing criteria or evaluating personal characteristics such as integrity, competence and motivation and also evaluating the personnel at least annually to determine their capabilities and competences. Selection of the personnel also depends upon the past experiences and the performance evaluation, Nature of past assignments allocated to the personnel.

Acceptance and Continuance of Clients and Engagements

Professional Competence:

The Firm endeavours that the engagement is completed with professional competence and undertakes only those engagements for which the Firm has the capabilities, resources, and professional competence to complete. The Firm implements this policy through the following procedures:

  • Evaluating whether the firm has obtained or can reasonably expect to obtain the knowledge and expertise necessary to perform the engagement, including relevant regulatory or reporting requirements.
  • Evaluating whether the following are in place:
    • The Firm has sufficient personnel with the necessary capabilities and competence;
    • Specialists are available if needed;
    • Individuals meeting the criteria and eligibility requirements to perform an engagement, when needed, are available whether internally or externally; and
    • The Firm is able to complete the engagement within the agreed reporting deadline
  • Evaluating the information obtained regarding acceptance or continuance of the client or engagement through the following Actives:
    • The engagement partner assesses the information obtained about the client or the specific engagement, including information about the significance of the client to the Firm, and makes a recommendation about whether the client or  engagement should be accepted or continued; and
    • The engagement partner completes client acceptance information and submits it to the Managing Partner for approval.

The Managing Partner assesses and approves the recommendation made by the engagement partner. If the Managing Partner recommends not accepting a client or discontinuing a client relationship, the Managing Partner discusses reasons for the acceptance or continuance decision with the other partners. The decision is taken by consensus.

To evaluate the integrity of the entity and its people.

The firm evaluates the factor bearing the management’s integrity and considers the risk associated with providing professional services in particular circumstances. This is done through the following:

  • Informing Firm personnel of the Firm’s policies and procedures for accepting and continuing clients.
  • Obtaining and evaluating relevant information the following before accepting or continuing a client
  • Communicating with the predecessor auditor when required or recommended by professional standards. This communication also includes inquiries regarding the nature of objections.
  • Conducting background checks of the business
  • Evaluating the risk of providing services to significant clients or to other clients for which the Firm’s objectivity or the appearance of independence may be impaired

To determine whether it has the competencies and resources to undertake the engagements
The Firm evaluates that the engagement is completed with professional competence; undertakes only those engagements for which the Firm has the capabilities, resources, and professional competence to complete; and evaluates, at the end of specific periods or upon the occurrence of certain events, whether the relationship should be continued. The Firm implements this policy through the following procedures:

  • Evaluating whether the firm has obtained or can reasonably expect to obtain the knowledge and expertise necessary to perform the engagement, including relevant regulatory or reporting requirements.
  • Evaluating whether the following are in place:
    • The Firm has sufficient personnel with the necessary capabilities and competence.
    • Specialists are available if needed
    • Individuals meeting the criteria and eligibility requirements to perform an engagement QC review are available, when needed, whether internally or externally.
    • The Firm is able to complete the engagement within the agreed reporting deadline.
  • Specifying conditions that trigger the requirements to re-evaluate a specific client or engagement.
  • Obtaining relevant information to determine whether the relationship should be continued and establishing a frequency for evaluations.
  • Evaluating the information obtained regarding acceptance or continuance of the client or engagement through the following Activities:
    • The engagement partner assesses the information obtained about the client or the specific engagement, including information about the significance of the client to the Firm, and makes a recommendation about whether the client or engagement should be accepted or continued.
    • The engagement partner completes a client acceptance form and submits it to the Managing Partner for approval.
    • The engagement partner signs a step in the planning program noting consideration of client continuance and completes a form documenting the rationale and conclusion regarding client continuance if conditions exist that trigger the requirement to reevaluate a client or engagement between annual audits.

The Managing Partner assesses and approves the recommendation made by the engagement partner. If the Managing Partner recommends not accepting a client or discontinuing a client relationship, the Managing Partner discusses reasons for the acceptance or continuance decision with the other partners.

  • Establishing procedures for dealing with information that would have caused the Firm engagement if the information had been available earlier.

To comply with the ethical requirements

Firm undertake or continue relationships and engagements only where it:

  • Has considered the integrity of the client and does not have information that would lead it to conclude that the client lacks integrity
  • Is competent to perform the engagement and has the capabilities, time and resources to do so and can comply with the ethical requirements.

The Firm satisfies this objective, with respect to the initial period for which the Firm is performing its service and other subsequent periods, by establishing and maintaining the policies and procedures

Monitoring

The firm assigns the responsibility of the monitoring process, including performance, to a partner or competent individual. The firm also ensures that the monitoring procedures are performed that are sufficiently comprehensive to enable the firm to assess compliance with all applicable professional standards and the Firm’s QC policies and procedures.

  • The Managing Partner designates a QC partner who is responsible for designing, implementing and monitoring the Firm’s QC system.
  • The QC partner’s responsibilities include ensuring that the Firm’s QC policies and procedures and its methodologies remain relevant and adequate. Identifying the need to do the following:
    • Revise policies and procedures related to QC which are ineffective or inappropriately designed.
    • Improve compliance with Firm policies and procedures related to QC.
  • Designating one or more partners to be responsible for performing an annual inspection. Inspection procedures include reviewing a cross-section of engagements using the following criteria in selecting engagements:
    • Significant specialized industries with an emphasis on high-risk engagements.
    • First-year engagements
    • Signiicant client engagements.
    • Level of service performed (that is, audit and attest, review, or compilation).
    • Engagements performed by all partners.
    • Engagements for which there have been complaints or allegations from Firm personnel, clients, or other third parties that the work performed by the Firm failed to comply with professional standards, regulatory requirements, or the Firm’s system of QC.
    • Engagements in which there were significant disagreements between the quality review partner and the engagement partner.
  • Establishing an approach and timetable for performing the inspection procedures and determining the forms and checklists to be used during the inspection and the extent of documentation required.
  • Reviewing correspondence regarding consultation on independence, integrity, and objectivity matters and acceptance and continuance decisions.
  • Reviewing the resolution on matters reported by professional personnel regarding independence to determine that matters have been appropriately considered and resolved.
  • Preparing a summary inspection report for the partner or management group that evaluates the overall results of the inspection and sets forth any recommended changes that should be made to the Firm’s policies and procedures.
  • Reviewing the recommended corrective actions and reaching final conclusions about the actions to be taken.
  • Reviewing and evaluating Firm practice aids, such as audit programs, forms, and checklists, and considering whether they reflect the most recent professional pronouncements.
  • Providing information during staff meetings regarding new professional standards, regulatory requirements, and the related changes that should be made to Firm practice aids.
  • Reviewing other administrative and personnel records pertaining to the QC elements.
  • Soliciting information from the Firm’s personnel during staff meetings regarding the effectiveness of training programs.
  • Discussing the engagement related observations of the inspection with the engagement partner and seeking his concurrence therewith.
  • Preparing a summary report that evaluates the overall results of the monitoring and sets forth any recommended changes that should be made to the Firm’s policies and procedures.
  • Reviewing the recommended corrective actions and reaching final conclusions as to the actions to be taken.
  • Communicating to all professional personnel the deficiencies noted and the related changes in QC procedures.
  • Following up on planned corrective actions to determine whether those actions were taken and whether they achieved the intended objective(s).
  • Reviewing and evaluating Firm practice aids, such as audit programs, forms, and checklists, and considering whether they reflect the most recent professional pronouncements.

Providing information during staff meetings regarding new professional standards, regulatory requirements, and the related changes that should be made to Firm practice aids.

  • Reviewing, or designating a manager-level individual to be responsible for reviewing the CPED policies and Reviewing, or designating a manager-level individual to review summaries of the CPED records of the Firm’s professional personnel to evaluate each
    individual’s compliance with the CPED requirements of the ICAI.
  • Reviewing other administrative and personnel records pertaining to the QC elements.

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