Examination Engagements

Question 1

What is an examination?

Answer 1

Attestation engagement to obtain reasonable evidence where you state an opinion about whether the subject matter is in accordance.

Highest level of assurance

Not an audit because audit is on F/S

Question 2

Should there be an engagement letter for an examination?

Answer 2

YES!

If the terms have not changed, the practitioner may remind the terms of the engagement but they need to document that communication

Question 3

What needs to be addressed in an engagement letter?

Answer 3

1) Scope and objective of the engagement
2) Responsibilities of the practitioner
3) Responsibilities of the responsible party
4) Statement that the engagement will be conducted in accordance to AICPA attestation standards
5) Statement about inherent limitations of an examination
6) Statement that identifies the measurement criteria to be used
7) Acknowledgment that the engaging party will provide a representation letter at the end of the engagement

Question 4

What should be done to plan for the engagement?

Answer 4

Establish the strategy

Develop an engagement plan

My need to revise the overall strategy and plan for unexpected events

Perform risk assessment procedures

Question 5

In performing the engagement, when should the auditor test controls?

Answer 5

When you rely on the controls or rate the controls at less than the maximum level

Question 6

If the auditor uses a specialist, what should the auditor do?

Answer 6

Understand their level of competence and objectivity (this includes the use of internal auditors)

For an internal auditor, they should review the auditors work. If you use internal auditor, you need to receive acknowledgment from management that they will be used to assist