Before the audit begins, the auditor performs pre-engagement acceptance or continuance procedures.This includes:
Throughout this process, you can expect:
Once the pre-engagement assessment is complete, the auditor issues an Engagement Letter with:
Which of the following factors most likely would cause an independent auditor to decide not to accept a new audit engagement? Which of the following statements is correct with regard to the predecessor- successor communications? Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor’s The preliminary engagement activities include all of the following except: When establishing an understanding with the entity regarding the terms of the engagement, all of the following should be discussed, except: Which of the following statements best represents the reason why auditors prepare engagement letters to be signed by their auditees? A written understanding between the auditor and the entity concerning the auditor’s responsibility for the discovery of non-compliance with laws and regulations is usually set forth in a(n) Which of the following factors would be of least importance to an auditor in determining how much reliance can be placed on the work of internal auditors? Which of the following would most likely indicate the existence of related parties? For which laws and regulations does the auditor have the same responsibility as that for errors and fraud? During the initial planning phase of an audit, an independent auditor most likely would When planning an audit, an auditor should Which of these statements concerning non-compliance with laws and regulations by clients is correct? The engagement partner reviews the work of engagement team members to evaluate which of the following? Which of the following would NOT be a typical supervisory activity for an audit? Tests of controls include all of the following except: A dual-purpose test is The concept of materiality as it applies to a financial statement audit According to the text, the first step in applying materiality to an audit is Which of the following is not a qualitative factor that may affect an auditor’s establishment of materiality? Performance materiality is When misstatements are greater than overall materiality, the auditor should Which is the first step in the audit engagement?Step 1: Define Audit Objectives
Prior to the audit, AMAS conducts a preliminary planning and information gathering phase. The assigned auditor defines the audit objectives and likely scope of the audit. The auditor starts to develop the audit program to define the audit testing procedures.
What are the steps in audit engagement?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.
When an auditor accepts an audit engagement?When an auditor accepts an audit engagement but does not possess the industry expertise of the business entity involved, the auditor should: Refer a substantial portion of the audit to another CPA who will act as the principal auditor. Obtain a knowledge of matters that relate to the nature of the entity's business.
What factors should an auditor consider prior to accepting an engagement letter?Client acceptance evaluation should include General Considerations, Management Integrity, Management Commitment to GAAP, Management Internal Control Consciousness, Financial Strength of the Client, and Other Risk Factors.
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