Lecture 13

Question 1

Non-audit services =

Answer 1

Anything that isn’t external audit

Question 2

3 categories of NAS

Answer 2

1) Services required by legislation eg legal/ regulatory/ contractual reports
2) Services most efficient for auditors to provide
3) Services that could be provided by a number of firms

Question 3

Arguments for prohibition of NAS (2)

Answer 3

• Compromises independence >familiarity threat

- Expectation gap

Question 4

Arguments against prohibition of NAS (3)

Answer 4

• Audit committee oversee relationship with auditors and reviews NAS
• Shareholders can assess NAS
• ICAEW > adverse effect on underlying quality of audit. Skill/ knowledge sharing/ sophisticated systems

Question 5

Objectives of internal controls (CAFE)

Answer 5

Conduct business in orderly manner
ensure Accuracy accounting records & assets safeguarded
Financial information is timely and reliable
Error/ fraud prevented and detected

Question 6

Fundamental principle of internal controls

Answer 6

Stronger the control system, the lower the risk of material misstatement

Question 7

ISA 265 =

Answer 7

Reporting deficiencies in internal control

Question 8

Reporting deficiencies in internal control

Answer 8

Auditor shall communicate in writing signif deficiencies in internal control on a timely basis

Question 9

Significant deficiency in internal control

Answer 9

Deficiency of sufficient importance to merit the attention of those charged with governance