Planning activities Flashcards
(12 cards)
Items to consider when accepting an engagement?
Integrity of management Industry considerations Entity specific issues Independence of audit personnel Competency of audit personnel
Required activity for successor auditor when a client changes auditors
Successor auditor is REQUIRED to initiate inquiry of the predecessor auditor before accepting engagement.
When a client changes auditors who is required to obtain the client’s permission to discuss client-related matters?
BOTH the successor and predecessor audit are required to obtain permission.
Components of predecessor auditor discussion.
Facts about management’s integrity
Disagreements between predecessor auditor and management (opinion shopping?)
Any communication the predecessor had with those charged with governance regarding sensitive matters
The predecessor’s understanding of the possible reason for change in auditors
Steps in developing an overall audit strategy
Define characteristics of the audit engagement
Identify reporting objectives of the engagement
Determine resource allocation to audit
What characteristics help define the scope of the audit?
Basis of reporting
Industry specific reporting requirements
Location of the entity
What characteristics help develop the focus of the audit engagement team?
Materiality levels
High risk audit areas
Level of reliance on effectiveness of internal control
Recent developments impacting the entity or industry
What is the goal of the audit plan?
Nature, timing, and extent of planned audit procedures to obtain sufficient and appropriate audit evidence.
What is included in the audit plan?
A description of the nature, timing, and extent of planned risk assessment procedures sufficient to assess the risk of material misstatement
A description of substantive tests and tests of controls for each material class of transactions, balances, and disclosures
Description of any other audit procedures
Steps in developing the audit plan
Develop the audit strategy
Develop the audit plan
Determine if a specialist is needed, whether on the audit staff or outside professional
Discuss the overall timing and strategy of the audit with the client (those charged with governance)
Supervise the audit
What is involved with supervising the audit staff?
Discussions regarding fraud
Informing staff of their responsibilities and objectives related to the audit
Settling differences of opinion among audit staff including allowing an assistant to document disagreement with conclusion reached and documenting the basis for the final resolution
Matters required to be communicated with those charged with governance
Auditor's responsibilities under GAAS Planned scope and timing of the audit Significant findings from the audit Illegal acts Going concern issues Fraud Deficiencies in internal control
