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Opposite of going concern basis

Break up basis
- assets written down to recoverable amount
- liabilities reassessed and changed to short-term


Lowballing A/NAS

FRC ethical standards state that audit fees should not be influenced by NAS


How long can key staff be kept on an audit for?

7 years, additional 2 if need to maintain audit quality (audit committee agreed)


Mgt rep needed for forecast

1) intended use of forecast
2) Completeness of mgt assumptions
3) Mgt acceptance of responsibility for the forecast


Forecasts: Limiting liability

1) restrict distribution
2) shouldn't be shown to 3rd party w/o permission (frm accountant)
4) liability cap agreed
5) caveat warning about diff between predicted and actual


Reasons for quality control

1) ISAs and standards require it
2) protects firms reputation
3) limits firms liability
4) ensures correct conclusions are drawn
5) maintain standard of audit work in line w/ reg expectation


Cold Review

~ conducted after date of audit report on sample of files
~ ensures compliance: firms policies, ISAs, ethical standards, regs
~ identifies improvement areas


When to revise engagement terms:

~misunderstood audit object + scope
~ revised terms
~sig change in ownership, mgt, nature/size of biz
~ change in legal requirements, reporting framework or requirements and engagement partner


Supervision before engagement

~ assess skills and set out responsibilities
~ brief on nature of client, risks and potential issues
~ explain audit approach and timings
~ introduce team to client staff


Supervision during engagement

~ review work to ensure correct audit evidence obtained that supports conclusions
~ check carrying out work as per audit plan
~ provide feedback on work reviewed
~ track progress against audit plan + update
~ answer questions
~ consider consulting upwards


When can you disclose confidential info w/o permission

1) required by law e.g. ML, bribery
2) required to report to regulators e.g. on reg breaches
3) in public interest
4) professional duty to disclose e.g. response to ICAEW inquiry/defend self in legal proceedings


Evidence collection procedures

A nalytical procedures
E nquire
I nspect
O bserve
U recalcUlate


Audit threshold exemptions

1) <50 e'ees
2) revenue <10.2m
3) gross assets <5.1m
~ got to have 2/3