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Accepting audit engagementsPreconditions for an auditAuditors should only accept a new audit engagement, or continue an existing audit engagement if the 'preconditions for an audit' required by ISA 210 Agreeing the terms of audit engagements are present. ISA 210 requires the auditor to:
If the preconditions for an audit are not present, the auditor should discuss the matter with management, and should not accept the engagement unless required to do so by law or regulation. ProceduresIf offered an audit role, the auditor should:
Engagement lettersThe engagement letter will be sent before the audit. It specifies the nature of the contract between the audit firm and the client and minimises the risk of any misunderstanding of the auditor's role. It should be reviewed every year to ensure that it is up to date but does not need to be reissued every year unless there are changes to the terms of the engagement. The auditor must issue a new engagement letter if the scope or context of the assignment changes after initial appointment. ISA 210 requires the auditor to consider whether there is a need to remind the entity of the existing terms of the audit engagement for recurring audits and many firms choose to send a new letter every year, to emphasise its importance to clients. The contents of the engagement letterThe contents of a letter of engagement for audit services are listed in ISA 210 Agreeing the Terms of Audit Engagements. They should include the following:
In addition to the above the engagement letter may also make reference to:
What an auditor should consider before accepting assurance engagement?The following conditions are required to be met before accepting an assurance engagement:. an expectation that relevant ethical requirements, such as independence and professional competence will be satisfied;. an expectation that there is a rational purpose to the engagement;. What are the factors an auditor will consider before accepting an audit assignment?Points to consider before accepting the Audit. Background information.. Eligibility.. Management assessment.. Investigation of industry involvement and risk factor.. What factors should an auditor consider prior to accepting an engagement explain why auditors need an understanding of the client's industry?What factors should an auditor consider prior to accepting an engagement? The auditor should investigate the client, the clients standing in the business community, financial stability, and relations with its previous CPA firm. You want to assess integrity of the client to avoid fraud.
What factors should an auditor consider prior to accepting an engagement prior to accepting a 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.
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