When should an auditor reject engagement?
In relation to the final bullet point, if management impose a limitation on the scope of the auditor’s work in the terms of a proposed audit engagement, the auditor should decline the audit engagement if the limitation could result in the auditor having to disclaim the opinion on the financial statements.
What factors should an auditor consider prior to accepting an engagement explain?
Assuming independence and requisite technical abilities, the pre- acceptance evaluation of a prospective audit engagement normally focuses on three factors: 1) personal integrity of the prospective client’s management and principals, 2) presence of circumstances pointing towards unusual risks in the engagement or …
When deciding whether to accept an audit client the auditor should?
Discuss the factors an auditor should consider before accepting a company as an audit client. Answer: The auditor should investigate and consider the prospective client’s standing in the business community, financial stability, management’s integrity, and relations with its bankers, attorneys, and previous CPA firm.
What are the processes to accept or continue with an audit engagement?
ensure that the legal requirements in relation to the removal of the previous auditors and the appointment of the firm have been met. carry out checks to ensure the firm can be independent, is competent to do this audit and has the necessary resources. assess whether this work is suitably low risk.
What is the difference between audit plan and overall audit strategy?
The Difference Between an Audit Strategy and Audit Plan
An audit plan states the detailed steps to be followed in the conduct of an audit. … The audit plan is much more detailed than the strategy document, since the plan states the nature, timing, and extent of the specific audit procedures to be conducted.
What should an auditor consider in developing the audit objectives of a particular engagement?
To plan the engagement effectively, internal auditors should start by understanding the context and purpose of the engagement, why it was included in the annual internal audit plan, and how the organization’s mission, vision, strategic objectives, and other elements align with those of the area or process under review.
What is a precondition for an audit?
Preconditions for an audit – The use by management of an acceptable financial reporting framework in the preparation of the financial statements and the agreement of management and, where appropriate, those charged with governance to the premise2 on which an audit is conducted. 5.
Why would an auditor perform engagement activities?
Pre-engagement activities take place before the auditor accepts or declines an audit engagement. These activities are performed when the auditor has to decide whether to accept a new client or to continue with the relationship with an existing client.
What is sufficient and appropriate audit evidence?
Sufficiency is the measure of the quantity of audit evidence. … Appropriateness is the measure of the quality of audit evidence; that is, its relevance and its reliability in providing support for the conclusions on which the auditor’s opinion is based.
What is overall audit strategy?
Overview: Audit strategy generally means the combination of audit approach to be used, resources management and allocation, timing of the audit, and the way how the audit engagement is managed. For example, the auditor will use risks based audit approach or top-down approach to conduct audit assignment.
What is the importance of understanding the client before going for an audit?
Obtaining an understanding of the client’s business is key to an effective and efficient audit. It enables us not only to tailor our work to meet the individual facts and circumstances of each client, but also to carry out that work and to evaluate our findings in an informed manner.
What are the 4 phases of an audit process?
Although every audit process is unique, the audit process is similar for most engagements and normally consists of four stages: Planning (sometimes called Survey or Preliminary Review), Fieldwork, Audit Report and Follow-up Review. Client involvement is critical at each stage of the audit process.
What are the phases stages of an audit engagement?
Audit engagements are performed in three general phases: planning, fieldwork & review, and reporting.
Which is generally the most persuasive form of evidence?
The most persuasive evidence, generally, is the externally generated evidence sent directly to the auditor, and the least persuasive evidence is, generally, the internally generated evidence. Discuss the impact of electronic processing of transactions on the audit.