MCQ 1: M/s Alpha & Co.

MCQ 1:

M/s Alpha & Co. is the statutory auditor of a listed entity, Zenith Ltd. The engagement partner, CA X, completed the audit and concluded that the auditor’s report was ready for issue on 25 June 2026. The Engagement Quality Control Reviewer (EQCR), CA Y, had not yet completed his review.

On 27 June 2026, CA Y completed his EQCR and identified that the engagement team had failed to adequately evaluate a significant accounting estimate. CA X discussed the matter with the team, obtained additional audit evidence and revised the conclusion on the estimate. CA Y thereafter completed his review on 30 June 2026.

The final auditor’s report was dated 30 June 2026.

During August 2026, while assembling and archiving the final audit file, the engagement team discovered that certain documentation supporting the revised evaluation of the estimate had not been included in the file. The team subsequently added the documentation, recording the reasons for the addition.

Which of the following is MOST ACCURATE?

A. The auditor’s report could validly have been dated 25 June 2026 because the EQCR is a review of significant judgments and conclusions and does not form part of the audit evidence-gathering process; the subsequent completion of the EQCR merely strengthens the quality of the engagement.

B. The auditor’s report could not be dated before completion of the EQCR; however, once the report was dated 30 June 2026, the documentation relating to the revised estimate could not be added in August 2026 because any post-report-date addition necessarily constitutes prohibited alteration of the audit file.

C. The report should not be dated before completion of the EQCR, and the fact that the EQCR resulted in additional audit work demonstrates that the review is not merely an administrative exercise; the subsequent addition to the documentation may be made where appropriate, subject to documenting the circumstances and relevant details of the modification/addition.

D. Since CA Y identified an inadequacy in the evaluation of the estimate, responsibility for the revised judgment shifted to CA Y; accordingly, CA X’s responsibility ended when CA Y completed the EQCR on 30 June 2026.