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F8 Audit and Assurance > 5 Planning > Flashcards

Flashcards in 5 Planning Deck (28)
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1
Q

What should be included in the audit plan?

A

The nature, timing, and event of risk assessment procedures and further audit procedures and any other procedures necessary to conform to auditing standards

2
Q

What does an interim audit focus on?

A

Documenting systems and evaluating controls

3
Q

What can an interim audit be used to do?

A

Test specific and complete material transactions, test transactions such as sales, purchases and payroll, access risks that will impact work in final audit and attend stock counts.

4
Q

What is the definition of fraud?

A

Intentional act by one or more individuals among management, those charged with governance, employees or third parties involving the use of deception to obtain an unjust or illegal advantage

5
Q

What are the two types of fraud?

A

Fraudulent financial reporting and misappropriation

6
Q

What is fraudulent financial reporting?

A

Deliberately misstating the financial statements to make the company’s performance or position look better/worse than it actually is

7
Q

What is fraud misappropriation?

A

The theft of a company’s assets such as cash or inventory

8
Q

What is the directors responsibility in respect of fraud and error?

A

To prevent and detect fraud
Implement an effective system of internal control
Create a culture of honesty, ethical behaviour and active oversight
Consider the need for internal audit department

9
Q

What is the auditors responsibility in respect of fraud and error?

A

Obtain reasonable assurance
Maintain an attitude of professional scepticism
Consider any incentives to commit fraud
Discuss among the engagement team
Identify and assess the risks of material misstatement

10
Q

What is the definition of non compliance?

A

Acts of omission or commission by the entity either international or unintentional which are contrary to the prevailing laws or regulations. (Must relate to business activities)

11
Q

What does engagement performance comprise of?

A

Direction, supervision and review of the engagement

12
Q

What does direction include in terms of engagement performance?

A
Informing team members of:
Their responsibilities
Objectives of the work to be performed
Nature of the business
Risks
Problems that may arise
The detailed approach to the performance of the engagement
13
Q

What does supervision include in terms of engagement performance?

A

Tracking the progress
Considering competence
Addressing matters arising
Identifying matters for consultation

14
Q

What does review include in terms of engagement performance?

A
  • The work has been performed in accordance with professional standards
  • Appropriate consultations have taken place
  • The work performed supports the conclusions reached
  • The evidence obtained is sufficient and appropriate to support the auditors report
15
Q

Listed entities and other high risk entities should be subject to what?

A

Engagement quality control review (hot review/pre insurance review)

16
Q

High risk clients include?

A

Those in the public interest, unusual circumstances and risks and those where laws and regulations require an EQCR

17
Q

What does a EQCR include?

A
  • discussion of significant matters with partner
  • review of FS and proposed auditors report
  • review of selected audit docs relating to judgements and conclusions
  • significant risks
  • judgements in respect to materiality and significant risks
  • uncorrected misstatements
  • matters to be communicated to management
  • conclusions reached
18
Q

What criteria must be met to be a engagement quality control reviewer?

A

Should have the technical qualifications to perform the role and should be objective

19
Q

What can a engagement quality reviewer be referred as?

A

Independent review partner

20
Q

During a cold review what is the purpose?

A

To assess whether the firms policies and procedures were implemented during an engagement and to identify any deficiencies

21
Q

When should a cold review take place?

A

After the auditors report has been signed

22
Q

What files should be selected during the cold review?

A

A selection of completed audit files for

23
Q

Who should a cold review be conducted by?

A

A dedicated compliance or quality department/a qualified external consultant/independent partner

24
Q

What should working papers demonstrate?

A

Sufficient appropriate evidence obtained

All matters were resolved before issuing the auditors report

25
Q

What do working papers provide a record of?

A
  • The planning and performance of the engagement
  • The supervision and review of the work performed
  • The evidence obtained which the assurance provider considers necessary + arrived at their conclusion
  • The quality control procedures carried out
26
Q

Working papers can be in what format?

A

Paper, film, electronic and other media

27
Q

Working papers should show?

A

Name of client, reporting date, file reference, name of preparer/reviewer/, dates, subject of working paper, objective, source, sample size, work performed, results and analysis of errors

28
Q

How long do auditors need to keep working papers?

A

For at least five years of the date of the auditors report