quality management Flashcards

Question

what guidance does ISA 220 give us on engagement performance?

Answer 1

Responsibilities of the Audit Engagement Partner: - Direct and supervise the engagement team's work. - Ensure the audit is planned and performed according to: - Firm's policies and procedures, - Professional standards, - Applicable legal and regulatory requirements. - Adjust resources as needed based on changing circumstances. Review Responsibilities: - Review audit documentation on: - Significant matters and judgments, - Contentious issues, - Conclusions reached by the team. - Conduct reviews at appropriate stages of the audit. Materiality Determination: - Review determination of materiality during the planning stage. - Reassess materiality if circumstances change during the audit. - Evidence Collection: - Ensure sufficient appropriate evidence is obtained before issuing the audit report. - Consultation Requirement: - Facilitate consultation on difficult and contentious matters: - Within the audit team, - Within the firm (with experts and specialists), - External to the firm as necessary. - Engagement Quality Review (EQR): - Ensure appointment of an EQR where necessary. - Ensure cooperation of the engagement team with the EQR. - Discuss all significant matters and judgments with the EQR. - Do not date the audit report until EQR is complete and any differences of opinion are resolved.

Answer 2

-this is not appropriate -auditor must determine materiality as a whole at planning stage, then revise it as the audit progresses, as new facts and info become available which impact materiality. it is possible that revising initially determined materiality may not be necessary but a review should have taken place and documented in audit working papers.

Answer 3

not enough SAE. as the cost is material, there is a risk of material misstatement. even if CV is less than materiality threshold (probably due to depcn) SAE must be obtained. physical verification must have been done to confirm existence, and operating effectiveness. also imp to know that there has been no damage or hints of impairment.

Answer 4

relying on third party evidence is not appropriate evidence obtained by the audit team directly is more reliable than evidence obtained indirectly. confirmations can be used to provide evidence but it is to CORROBORATE the evidence already gathered by auditor. not to be relied on as the only source of evidence also understand the relation between the third party. are they related parties? this would impact whether or not the external confirmation can be relied upon as a source of evidence

Answer 5

-discrepancies should be discussed with management as they could indicate more widespread problems of the inventory count, like some items left and instructions not followed. -ISA says that the auditor present at the inventory count should evaluate management instructions and procedures for inventory count. -auditor present at inventory count should have raised concern over there, and assessed if a recount of inventory was required. -training must be provided so the audit team knows their role at inventory count and can deal with issues appropriately. -further audit work: extrapolate test count results on entire population. then evaluate result as per ISA, which requires that misstatements must be accumulated by auditor and discussed with management -also a control deficiency, raise with TCWG.

Answer 6

-review should be hierarchial, manager shud have reviewed before partner -review shud have happened on regular, timely basis to identify any issues and resolution timely

Answer 7

-proper review not done -not all evidence needs to be reviwed but quick look means thorough review has not taken place. risky and judgemental areas must be reviewed in sufficient detail. ISA says partner must review thoroughly and be satisfied that SAE has been obtained in order to reach conclusion and sign audit report

Answer 8

potential threat to objectivity self interest threat as brother recieves income from client significant risk because of his position of influence. might even be getting commission partner of ethics in firm should be informed, and they should evaluate the threat confirm amount paid, whether its market rate,and whether any other service providers considered. comments of not discusisng shows lack of integrity, indicating P has something to hide. increases objectivity threat partner may need to be removed and his work reviewed.

Answer 9

accept an audit only if: -preconditions are present -common understanding between auditor , management and TCWG is present regarding the terms of the audit if not present (not acceptable FR frameowrk, not accepting responsibilities, limiation of scope of audit by TCWG) then dont accept audit

Answer 10

management understands and accepts responsibiltiy for: -preparing and presenting FS in accordance with applicable FR framework -management is responsible to implement internal control system for the FS to give true and fair view - and for providing auditor with access to all relevant info and explanations

Answer 11

auditor must assess if circumstances have changed so that engagement terms need to be changed. also assess if entity needs to be reminded of existing terms no need to send new EL for each letter unless evidence of misunderstanding by client

Answer 12

-acca members (associates or fellows) may use ACCA or FCCA after their names -a firm may call itself a firm of CHARTERED CERITFIED ACCOUNTANS where: -at least half the partners are ACCA members -those partners hold atleast 51% of voting rights under the partnership agreement such a firm can use acca logo on stationary and website a firm which has firms audit certificate from ACCA can call itself "registered auditors" firm with all partners who are chartered ceritifed accountants can use "member of ACCA" a firm can not use member of acca in its registered practice name.