Why an auditor might not accept an audit engagement?
Audit engagement should not be accepted under following circumstances: Serious limitations on scope. Financial reporting framework is unacceptable. Management refuses to provide agreement that it acknowledges its responsibility as regards financial statements.
What factors should an auditor consider prior to accepting an engagement explain?
Assuming independence and requisite technical abilities, the pre- acceptance evaluation of a prospective audit engagement normally focuses on three factors: 1) personal integrity of the prospective client’s management and principals, 2) presence of circumstances pointing towards unusual risks in the engagement or …
What are the three main reasons why the auditor should properly plan engagements?
There are three main reasons why an auditor should properly plan audit engagements.
- Client acceptance or continuation. …
- The auditor should identify why the client wants or needs an audit. …
- Obtain an understanding with the client about the terms of the engagement. …
- Develop an overall audit strategy.
Why do auditors fail?
Failing to sufficiently modify audit tests as the primary drivers of audit failures. Insufficient or Inadequate training; • Lack knowledge of fraud schemes; and • Undue trust in management.
When should an auditor reject engagement?
In relation to the final bullet point, if management impose a limitation on the scope of the auditor’s work in the terms of a proposed audit engagement, the auditor should decline the audit engagement if the limitation could result in the auditor having to disclaim the opinion on the financial statements.
What are the 7 audit assertions?
Companies must attest to assertions of existence, completeness, rights and obligations, accuracy and valuation, and presentation and disclosure.
Why would an auditor perform engagement activities?
Pre-engagement activities take place before the auditor accepts or declines an audit engagement. These activities are performed when the auditor has to decide whether to accept a new client or to continue with the relationship with an existing client.
What is the importance of understanding the client before going for an audit?
Obtaining an understanding of the client’s business is key to an effective and efficient audit. It enables us not only to tailor our work to meet the individual facts and circumstances of each client, but also to carry out that work and to evaluate our findings in an informed manner.
What is the meaning of audit engagement?
An audit engagement is an agreement between a client and an independent third-party auditor to perform an audit of some element of the client’s business, such as accounting records, financial statements, internal controls, regulatory compliance, information systems, operational processes, etc.
Who is responsible for audit plan?
. 03 The engagement partner1 is responsible for the engagement and its performance. Accordingly, the engagement partner is responsible for planning the audit and may seek assistance from appropriate engagement team members in fulfilling this responsibility.
What are the 4 phases of an audit process?
Although every audit process is unique, the audit process is similar for most engagements and normally consists of four stages: Planning (sometimes called Survey or Preliminary Review), Fieldwork, Audit Report and Follow-up Review. Client involvement is critical at each stage of the audit process.
What is permanent and current audit file?
Audit files contain records that comprise the audit documentation for a specific engagement or client. Usually, permanent audit files include information about a client’s legal and organizational structure. Current audit files contain documents relating to a particular engagement or period about a client.