Audit, Assurance and Related Services

1.9 Quality control review Program of ICAP

Introduction
The ICAP Council formed the Quality Control Review (QCR) Committee in 1987 with the primary
objective of establishing an independent quality control review framework in respect of audits of
financial statements conducted by audit firms. The QCR Committee was converted into the
Quality Assurance Board in 2005.
The QCR Program is a key part of ICAP’s regulatory framework, established to develop and
maintain compliance of professional standards amongst the firms engaged in the audit of limited
companies particularly listed entities.
The Listed Companies (Code of Corporate Governance) Regulations 2017 require every
company to appoint as external auditors, a firm which has been given a satisfactory rating under
Quality Control Review Program, of the ICAP and is registered with Audit Oversight Board (AOB)
established under Securities and Exchange Commission of Pakistan (SECP) Act, 1997. An audit
firm shall be entitled to be registered with AOB on the recommendation of Quality Assurance
Board (QAB) in accordance with the quality control review framework issued by ICAP.
In addition to listed companies, non listed companies of the following categories are required to
appoint a Chartered Accountant firm as their external auditors which hold a satisfactory QCR
rating under the QCR program of the ICAP:
q Public Interest Company;
q Large Sized Company; and
q Public Interest and Large Sized Companies licensed / formed under Section 42 and
Section 43 of the Ordinance.
The framework for the QCR Program was initially issued in 2003 and subsequently revised in
2006, 2009, 2015 and 2019.

© Emile Woolf International 102 The Institute of Chartered Accountants of Pakistan

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The AOB, the independent audit regulator, was established by the Parliament in August 2016
under Securities and Exchange Commission of Pakistan Act 1997. It has following functions to
perform:
q undertakes review of the QAB work and assesses the appropriateness of the QCR
framework
q registers audit firms that conduct or intend to conduct the audit of public interest
companies
q oversees and reviews policies, procedures, programs of QAB
q conducts an inspection of the records of QAB in respect of an audit firm registered with
AOB
q may directly inspect the records of an audit firm and a public interest company.
Quality Assurance Board
The Quality Assurance Board (QAB) was established to independently undertake the
implementation and oversight of the Quality Control Framework. The board is responsible for
(inter alia):
q deciding QCR ratings for firms
q Setting policies for the implementation of the QCR Framework and monitoring of its
adequate and effective implementation
q recommending firms to AOB for registration or deregistration under SECP Act 1997
The QAB is assisted by the Quality Assurance Department, in discharging its functions.
Overview of the QCR program
Under the QCR Program, both engagement reviews and overall firm reviews are performed.
q ‘Engagement Reviews’ involve review of audit working papers and entity’s financial
statement of selected audit engagements to evaluate:
i. implementation of the system of quality control with respect to audits conducted;
ii. whether or not the audit was carried out and audit report(s) issued by the Firm in
accordance with ISAs, relevant ethical requirements, or legal and regulatory
requirements as applicable in Pakistan
q In ‘Firm review’ firm’s system of quality control is assessed in compliance with ‘ISQC 1’

© Emile Woolf International 103 The Institute of Chartered Accountants of Pakistan