ISQM-CH 2: engagement quality review in the audit firm

Last updated: October 2026 · fastview ag, Suhr

Professionally responsible: Marco Zanetti and Reto Ackermann, fiduciaries and certified auditors, fastview ag

ISQM-CH 2 governs the engagement quality review: before the report is issued, a person who is not part of the engagement team assesses the team’s significant judgements and the conclusions in the report. The standard supplements ISQM-CH 1, which covers the firm’s quality management as a whole. pruvia records this quality review for each engagement and passes the information on to quality management as evidence.

What ISQM-CH 2 is about

ISQM-CH 2 is the Swiss version of the international standard ISQM 2 on engagement quality reviews. It governs how the quality reviewer is appointed, which requirements the reviewer must meet and how the review is performed and documented. The engagement partner remains responsible for the quality of the engagement; the quality review does not replace this responsibility, it provides a second, objective assessment of the most important judgements.

Whether such a review is needed for an engagement does not follow from ISQM-CH 2 alone. Within ISQM-CH 1 the audit firm sets criteria (para. 34(f)) and applies them to every engagement. ISQM-CH 2 begins where the decision “required” has been made.

When it is required

An engagement quality review is carried out in these cases:

• The engagement is of high public interest (PIE).
• Significant risks or unusual circumstances have been identified.
• Legal or regulatory requirements demand it.
• The firm’s own policy in the quality management system provides for it.

The fourth case is the firm’s room for discretion. A small audit firm may, for example, decide that every engagement with a difficult consultation or every ordinary audit of a larger company is reviewed. What matters is that the criteria exist in writing, that the decision is recorded for each engagement and that even a decision against a quality review is justified.

Who may carry it out

The quality reviewer must meet three requirements:

• Suitability: the reviewer has competence and experience matching the nature and complexity of the engagement, sufficient time for the review and the authority needed to enforce objections.
• Objectivity: the reviewer is not part of the engagement team and does not take part in the significant judgements of the engagement. If the reviewer advises the team, this is limited to questions that do not endanger their objectivity.
• Cooling-off period: whoever led the engagement as the responsible partner may take over the quality review of the same engagement only after two years.

The person may belong to the firm or be external. In a firm with only one licensed person, an external person, for example from another audit firm, is usually the only option. The firm checks suitability and objectivity before the appointment and records the result.

What it covers

The quality reviewer discusses the significant matters with the engagement partner and examines selected documents from the working papers. Five areas are at the centre:

• Planning: risk assessment, materiality and the planned responses to the risks.
• Significant judgements: whether the team’s judgements are appropriate, in particular for significant risks and estimates, and what the team’s assessment of independence concluded.
• Consultations: whether difficult or contentious matters were consulted on and the conclusions have been implemented in the engagement.
• Draft report: the financial statements and the draft report; the conclusions must match the audit evidence.
• Documentation: the working papers on the significant judgements support the conclusions in a comprehensible way.

The review is not a second audit. It concentrates on the points where an erroneous judgement would change the statement of the report most. The quality reviewer documents what was reviewed, which findings were made and how they were resolved.

Completion before the report date

ISA-CH 220 ties the report to the quality review: the engagement partner does not date the report before the engagement quality review is completed. It is completed only when the quality reviewer’s findings are resolved and the reviewer is aware of no matters indicating that the significant judgements would be inappropriate. In practice, the review belongs in the engagement timetable, with sufficient reserve before the time at which the report is to be signed and sent.

Relationship to ISQM-CH 1 and to the inspection

In the component “Engagement performance” (para. 31, 34(f)), ISQM-CH 1 requires the audit firm to set criteria for the engagement quality review. In pruvia this includes the evidence “Engagement quality review assessed”: it shows that the decision exists for the firm’s engagements. How the system as a whole is built is described on the page ISQM-CH 1 in the audit firm.

The inspection (component “Monitoring and remediation”, para. 35–47) then looks back. In the firm review it asks whether consultations and engagement quality reviews are documented; in the file review it checks, on a completed engagement, whether the criteria were applied. The two instruments complement each other: the engagement quality review prevents erroneous judgements before the report, the inspection discovers systematic gaps afterwards. Whoever inspects an engagement must not have been involved in it; the firm can also outsource the inspection, as described under Inspection and annual evaluation.

Scope: ordinary audit and limited statutory examination

For the ordinary audit and equivalent engagements, at least ISQM-CH 1, ISQM-CH 2 and ISA-CH 220 apply. For the limited statutory examination, at least the AQM guide of TREUHAND|SUISSE applies. Audit expert firms apply the ISQM-CH set to all engagements, including limited statutory examinations.

The Federal Audit Oversight Authority (FAOA) has recognised ISQM-CH 1 and ISQM-CH 2 since 15 December 2025 and ISA-CH 220 since 15 December 2024. Circular 1/2014 on internal quality management was amended on 19 June 2026 and is binding from 15 December 2026; QS 1 and ISQC-CH 1 thus lapse. The pronouncements of EXPERTsuisse and the FAOA are authoritative.

How pruvia guides it for each engagement

On the page “Engagement-level quality assurance (ISQM-CH 2)”, pruvia guides five steps; each step shows whether it is completed.

1. Declarations of the persons involved. For each person the following is confirmed: independence, confidentiality, acknowledgement of the quality management system and absence of conflicts of interest. If an annual confirmation already exists, it can be adopted.
2. Engagement-level measures. Six confirmations: acceptance and continuance, independence of the team, suitability and capacity, consultation, assessment of the need for an engagement-related quality review and engagement review before issuing the report.
3. Consultation. Decision whether consulting a specialist is required, with a comment.
4. Engagement quality review. Decision “required” or “not required” with a comment giving the reasons. The four cases from the section “When it is required” appear alongside as a note.
5. Engagement review before issuing the report. Engagement management confirms that the review took place.

From this information pruvia forms the evidence “Engagement quality review assessed” in the component “Engagement performance” of ISQM-CH 1. If the decision is “not required”, the step counts as completed; if it is “required”, it stays open until performance is confirmed. Report approval in pruvia follows the four-eyes principle. The assessment of the team’s judgements is made by the quality reviewer; pruvia assesses nothing.

Frequently asked questions

When does an engagement need an engagement quality review?

For engagements of high public interest (PIE), for significant risks or unusual circumstances, when law or supervision requires it and when the audit firm’s policy provides for it. The firm sets the criteria in its quality management system and decides for each engagement.

Who may carry out the engagement quality review?

A person who is not part of the engagement team, has the necessary competence, experience, time and authority, and is objective. The person may belong to the firm or be external. In a firm with only one licensed person, an external person is usually the only option.

May the former engagement partner take over the quality review?

Only after a cooling-off period of two years. Until then the required objectivity is lacking, because the person helped shape the significant judgements of the engagement.

What applies to the limited statutory examination?

For the limited statutory examination, at least the TREUHAND|SUISSE quality management guide (AQM guide) applies. Audit expert firms apply the ISQM-CH set to all their engagements, including limited statutory examinations.

By when must the quality review be completed?

Before the report date. The engagement partner does not date the report as long as the quality review is not completed and its findings are not resolved (ISA-CH 220).

How does the engagement quality review differ from the inspection?

The engagement quality review takes place for each engagement before the report is issued. The inspection under ISQM-CH 1 assesses afterwards, as a rule on a sample basis, whether the quality management system works and the criteria were applied.

What does pruvia record about the engagement quality review?

For each engagement: the declarations of the persons involved, the engagement-level measures, the decision on consultation and on the engagement quality review with a comment, and the engagement review before issuing the report. The result feeds into ISQM-CH 1 as evidence. The assessment itself is made by the quality reviewer.

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