Answer:
Step-by-step explanation:
In simple terms, there are two sets of rules that apply to auditing firms when they perform audits and reviews of past financial information. These rules are designed to ensure the quality and accuracy of the auditing process.
The first set is called Standards of Quality Control (SQC), which applies to all the services covered by Engagement Standards. These standards lay out the guidelines and requirements that auditing firms must follow when conducting audits, reviews, and other related services for historical financial information. The purpose of these standards is to maintain a high level of quality and consistency in the auditing process.
The second set is called Standards on Auditing (SA), which specifically applies to the auditing of historical financial information. These standards come into play whenever an independent audit is conducted. They provide specific guidelines and procedures that auditors must follow to ensure the reliability and credibility of the financial information being audited.
Overall, these standards serve as a framework for auditing firms, outlining the necessary steps and guidelines to maintain quality, accuracy, and integrity in the auditing process.