Matching
For each of the following firm policies or actions taken during the accept/reject phase of the audit , indicate the step to which it relates.
Premises:
National office approval is required for any new audit engagement that cannot commence until after the balance sheet data.
Obtain the client’s approval to communicate with the predecessor auditor.
For new clients, determine that acceptance would not result in any conflicts of interest with that of other clients.
Written contracts are required on all professional engagements.
Plan to review and test all work performed for the audit team by client personnel.
Identify the intended users of the audited financial statements.
Audit teams must contain a partner, at least one manager and at least one senior.
Formally document the nature of the engagement and the auditor’s responsibilities.
Assess the prospective client’s legal and financial stability.
Before accepting a new engagement, assess the probable impact on the firm’s overall work schedule and ability to service existing clients.
For potential new SEC clients, review the report filed with the SEC concerning change in auditors.
Assess the general condition and availability of the more important accounting records.
Circulate the name of all prospective clients to the professional staff to identify any prohibited financial or business relationships.
Consider the need for the use of a specialist on the engagement.
For continuing clients, all top management changes require partner-in-charge review.
Responses:
evaluating integrity of management
identifying special circumstances and unusual risks
assessing competence to perform audit
evaluating independence
making the decision to accept or decline the audit
preparing engagement letter
Correct Answer:
Premises:
Responses:
National office approval is required for any new audit engagement that cannot commence until after the balance sheet data.
Obtain the client’s approval to communicate with the predecessor auditor.
For new clients, determine that acceptance would not result in any conflicts of interest with that of other clients.
Written contracts are required on all professional engagements.
Plan to review and test all work performed for the audit team by client personnel.
Identify the intended users of the audited financial statements.
Audit teams must contain a partner, at least one manager and at least one senior.
Formally document the nature of the engagement and the auditor’s responsibilities.
Assess the prospective client’s legal and financial stability.
Before accepting a new engagement, assess the probable impact on the firm’s overall work schedule and ability to service existing clients.
For potential new SEC clients, review the report filed with the SEC concerning change in auditors.
Assess the general condition and availability of the more important accounting records.
Circulate the name of all prospective clients to the professional staff to identify any prohibited financial or business relationships.
Consider the need for the use of a specialist on the engagement.
For continuing clients, all top management changes require partner-in-charge review.
Premises:
National office approval is required for any new audit engagement that cannot commence until after the balance sheet data.
Obtain the client’s approval to communicate with the predecessor auditor.
For new clients, determine that acceptance would not result in any conflicts of interest with that of other clients.
Written contracts are required on all professional engagements.
Plan to review and test all work performed for the audit team by client personnel.
Identify the intended users of the audited financial statements.
Audit teams must contain a partner, at least one manager and at least one senior.
Formally document the nature of the engagement and the auditor’s responsibilities.
Assess the prospective client’s legal and financial stability.
Before accepting a new engagement, assess the probable impact on the firm’s overall work schedule and ability to service existing clients.
For potential new SEC clients, review the report filed with the SEC concerning change in auditors.
Assess the general condition and availability of the more important accounting records.
Circulate the name of all prospective clients to the professional staff to identify any prohibited financial or business relationships.
Consider the need for the use of a specialist on the engagement.
For continuing clients, all top management changes require partner-in-charge review.
Responses:
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