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Related Flashcards
Related Topics
Cards In This Set
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1.Client Acceptance or Continuance
2. Communication between predecessor and prospective auditors
3. Compliance with Independence and Ethical Requirements
4. Engagement Letters
5. Termination Letter
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Pre engagement activities
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Responsibilities principle
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•principle requires auditors to comply with appropriate ethical requirements for each audit engagement
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Independence in appearance
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•relates to perceptions of auditors’independence
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Engagement letter
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When a new client is accepted or when an audit engagement continues
-contract between auditor and client |
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Engagement letter
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•Serves as a means of reducing the risk of misunderstandings with the client and as a means of avoiding legal liability for claims that the auditors did not perform the work promised
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Obj of engagement, mgmt & auditors responsibilities, any limitations of engagement
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Engagement letter should include
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Audit plan
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•A comprehensive list of the specific audit procedures that the audit team needs to perform to gather sufficient appropriate evidence on which to base their opinion on the financial statements
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Audit plan
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•describes the procedures to be performed to assess the risk of material misstatement at the financial statement and assertion level
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Audit plan
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•plan the nature, timing and extent of control tests and substantive tests that are designed to mitigate these risks to an acceptable level
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–Audit engagement partner
–Audit manager
–IT audit specialist
–Tax partner
–Quality assurance partner
–Audit staff
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Audit engagement teams usually consist of
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Objectivity and competence
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•Prior to using the work of internal auditors, external auditors should consider internal auditors’
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Professional judgment
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Internal auditors should not be delegated tasks that require extensive
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Specialists
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•persons skilled in fields other than accounting and auditing who are not members of the audit team
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•professional qualifications, experience and reputation and methods and assumptions
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Auditors must know about the specialist's
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Specialists
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Should be unrelated to the company being audited
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