Engagement Quality Review

The engagement quality review (EQR), formerly known as a concurring partner review, is a critical quality control mechanism. It provides an independent check on the most significant decisions made during an audit.

What Is an EQR?

An EQR involves a qualified reviewer who:

• Was not involved in the engagement
• Evaluates significant judgments made by the engagement team
• Reviews the audit report before issuance
• Provides concurring approval for report release

When Is an EQR Required?

PCAOB Requirements

• All audits of public companies (issuers)
• All broker-dealer audits
• Other engagements as determined by firm policy

AICPA Requirements (QM Standards)

• Engagements identified as having elevated quality risk
• Based on firm's quality management system
• May include: initial engagements, complex industries, high-risk clients

EQR Reviewer Qualifications

The reviewer must:

• Be a partner or equivalent level
• Have sufficient competence and experience
• Not be involved in the engagement
• Not have made significant engagement decisions
• Maintain objectivity throughout the review
• Complete required continuing education

Scope of the Review

Must Review

• Significant risks identified and audit response
• Significant judgments about materiality
• Evaluation of uncorrected misstatements
• Appropriateness of audit opinion
• Going concern assessment
• Significant unusual transactions
• Critical audit matters (for PCAOB engagements)

Documentation

The EQR reviewer documents:

• Procedures performed
• Conclusions reached
• Whether concurring approval is granted
• Any matters discussed with the engagement partner

EQR vs. Other Reviews

Best Practices

1. Involve early: EQR reviewers should be consulted on significant issues as they arise
2. Protect independence: Reviewer should not make engagement decisions
3. Document thoroughly: Record all procedures and conclusions
4. Allow sufficient time: Don't compress review into final days
5. Candid dialogue: Encourage constructive challenge