A2 Flashcards
what is done in the pre-acceptance phase
asses ability to meet reporting deadlines, staff engagement, independence, integrity of client management, group audits
management responsibilities
fair presentation of framework, design of internal control free from material misstatement, provide auditor with access to info.
engagement letter contents
objective, responsibilities, financial reporting framework, inherent limitations of audit, reference tp expected form
what should be communicated with predecessor auditor
suspected fraud, noncompliance of laws, bear management integrity, disagreement, reason for change, internal control matter, understanding of entity’s relationships
reasons to change auditor
-change in client requirements
-misunderstanding of nature or service
reasons for revisions
-change in management/ ownership
-misunderstandings regarding engagement
Elements of Quality Control
Human Resources
Engagement/Client acceptance
Leadership responsibility
performance of engagement
Monitoring
Ethical Requirement
issuance rules for issuers
45 days to complete following release date, 7 years to retain
issuance rules for non-issuers
60 days to complete following release date, 5 years to retain
has continuing interest from year to year
permanent file
all audit documentation that is applicable to the year
current file
evidence of basis of auditor’s report/ conclusion
audit documentation
Components of Internal Control
-Control Environment
-Risk Assessment, Management assessment
-Information and communication systems
-Monitoring
-Existing Control activities
Objectives of internal control
-reliability of financial reporting
-effectiveness of operation
-compliance with laws and regulations
established to study factors that lead to fraudulent reporting
COSO
asses quality of control performance overtime
Monitoring
used to classify and report transaction
information systems
segregation of duties functions
authorization, record keeping, custody of related assets
Existing control activities functions
-Prenumbering of documents
-authorization and approval of transactions
-independent checks to maintain asset accountability
-documentation
-timely and appropriate finance reviews
-information processing controls
-physical or logical controls
-segregation of duties
auditors specialist
used to obtain sufficient evidence from professionals other than the accounting field
management specialist
specialist used to assist entity in preparing Financial statements
component auditor
performs work on financial information that will be used as audit evidence for group audits
inherent risk
failure other than control
control risk
not prevented or detected in timely basis
