Audit Responsiblities

Question 1

Rights following a reappointment

Answer 1

Outgoing auditors may:
-Make representations and request directors to circulate to members
- Attend and speak at a general meeting

Question 2

Responsibilities following a reappointment

Answer 2

• Prepare a statement of circumstances explaining reasons for ceasing to hold office and send this to the client and Registrar of Companies
• Obtain permission from client to communicate with prospective auditor’s communication
• Return all books and records of the company
• Maintain confidentiality
• Maintain anti-money laundering identification records

Question 3

Assessing integrity of key management prior to acceptance

Answer 3

• Obtain client’s permission to contact the previous auditor
• Obtain references from reliable third parties
• Conduct basic background checks on directors
• Undertake internet/press cuttings searches
• Hold discussions with the directors
• Inspect prior year auditor’s reports

Question 4

Hot Review

Answer 4

• Known as an engagement quality review
• Is for audits of listened clients or other high-risk audits
• Evaluating the significant judgements the team has made and the conclusions it reached in forming the opinion
• EQR takes place place on or before date of auditors report
• Not a review of all working papers
• There is a discussion of significant matters with the engagement partner
• Selected documentation is reviewed including FS and auditor’s report

Question 5

Cold Review

Answer 5

• Also known as monitoring
• Conducted after the auditor’s report on a sample of files.
• Ensures compliance with firm’s procedures and ISA, ethical standards and legislative requirements.
• Identify areas requiring improvement
• Take remedial action/training.

Question 6

what understandings does there need to be for component auditors?

Answer 6

• Ascertain compliance with ethical requirements and confirm their independence
• Ascertain component auditor’s professional competence, capabilities and resources
• Ascertain if the firm will be involved in the audit work of Turner or will plan its own audit procedures

Question 7

what should be communicated to component auditors?

Answer 7

• details of work to be performed
• what form of communication will there be between the auditors
• materiality levels
• any significant risks of fraud/error
• related parties