Final answer:
The Sarbanes-Oxley Act of 2002 explicitly requires the engagement quality review for audits of public companies. It also emphasizes considering subsequent events and disclosing all contingent liabilities.
Step-by-step explanation:
The Sarbanes-Oxley Act of 2002 explicitly requires the engagement quality review for audits of public companies. An engagement quality review involves an independent partner reviewing the significant judgments made by the engagement team during the audit process to ensure compliance with professional standards. This review helps to enhance the quality and reliability of the audit.
Although the act does not explicitly require the review of subsequent events, it does emphasize the importance of considering events and transactions that occur after the balance sheet date. Disclosing all contingent liabilities is also an important requirement to provide full transparency and ensure accurate financial reporting.
Seven-year client rotation, on the other hand, is not explicitly required by the Sarbanes-Oxley Act, but it is a practice that some auditing firms may implement voluntarily to enhance audit independence.