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 …
Why an auditor might not accept an audit engagement?
Audit engagement should not be accepted under following circumstances: Serious limitations on scope. Financial reporting framework is unacceptable. Management refuses to provide agreement that it acknowledges its responsibility as regards financial statements.
Why integrity is important in auditing?
Integrity will help the internal auditors to earn better trust in their professional judgments by other departments or stakeholders. … Internal auditors should perform their works honestly to the company. They should respect the company’s policy, decision as well as procedure, and manual.
Why is there a need to inquire the predecessor auditor in considering whether to accept or reject a new audit engagement?
Inquiry of the predecessor auditor is a necessary procedure because the predecessor auditor may be able to provide information that will assist the successor auditor in determining whether to accept the engagement.
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 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.
Which is the 4 steps in accepting an audit engagement?
Each audit engagement is unique, but most share the basic steps of preparation, planning, field testing, and audit procedures, as well as subsequently rendering the audit opinion.
What will an auditor who has been proposed for an audit engagement usually prior to accepting a new client?
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 is the meaning of integrity in audit?
Integrity requires auditors to. observe both the form and the spirit of auditing and ethical standards. Integrity also. requires auditors to observe the principles of independence and objectivity, maintain. irreproachable standards of professional conduct, make decisions with the public interest.
What is meant by integrity in auditing?
As we reviewed, integrity is defined as having strong ethical standards and honesty, and by extension, integrity audits are ways that the government checks to make sure companies are operating in an ethical, fair, and honest manner.
What are the rules of auditing?
Auditing – Basic Principles
- Planning. An Auditor should plan his work to complete his work efficiently and well within time. …
- Honesty. An Auditor must have impartial attitude and should be free from any interest. …
- Secrecy. …
- Audit Evidence. …
- Internal Control System. …
- Skill and Competence. …
- Work Done by Others. …
- Working Papers.
What is the primary purpose of reviewing these workpapers?
FEDERAL REGULATORS INSIST they have no interest in auditing auditors but merely want to do their jobs more efficiently. The primary purpose of a workpaper review is examination scoping, in which a review of the work of external auditors can help regulators to better focus their own resources.
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.
Is the auditor required to review working papers after FS has been issued?
After the financial statements have been issued, the auditor has no obligation to perform any audit procedures regarding such financial statements.