Which of the following factors would cause an auditor not to accept a new audit engagement?

Under what circumstances the auditor should 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?

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 …

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.

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What will an auditor who has proposed on an audit engagement usually do prior to accepting a new client?

Discuss the factors an auditor should consider before accepting a company as an audit client. Answer: The auditor should investigate and consider the prospective client’s standing in the business community, financial stability, management’s integrity, and relations with its bankers, attorneys, and previous CPA firm.

What are the 7 audit assertions?

Companies must attest to assertions of existence, completeness, rights and obligations, accuracy and valuation, and presentation and disclosure.

Which is the 4 steps in accepting an audit engagement?

Each audit engagement is unique, but most share the basic steps of preparation, planning, field testing, and audit procedures, as well as subsequently rendering the audit opinion.

Audit engagement checklist

  • Prepare & Plan. …
  • Conduct fieldwork. …
  • Gather evidence. …
  • Report findings & file supporting documents.

What are the 3 types of audits?

There are three main types of audits: external audits, internal audits, and Internal Revenue Service (IRS) audits. External audits are commonly performed by Certified Public Accounting (CPA) firms and result in an auditor’s opinion which is included in the audit report.

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 should an auditor consider in developing the audit objectives of a particular engagement?

Assurance engagement objectives must: Reflect risks to the business objectives of the area or process that were assessed as significant during the preliminary risk assessment (Standard 2210. A1). Consider the probability of significant errors, fraud, noncompliance, and other exposures (Standard 2210.

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What is the difference between audit plan and overall audit strategy?

The Difference Between an Audit Strategy and Audit Plan

An audit plan states the detailed steps to be followed in the conduct of an audit. … The audit plan is much more detailed than the strategy document, since the plan states the nature, timing, and extent of the specific audit procedures to be conducted.

What are the processes to accept or continue with an audit engagement?

ensure that the legal requirements in relation to the removal of the previous auditors and the appointment of the firm have been met. carry out checks to ensure the firm can be independent, is competent to do this audit and has the necessary resources. assess whether this work is suitably low risk.