Ch.3 Client acceptance

Question 1

Canadian Standard on Quality Control (CSQC) 1

Answer 1

identifies the responsibilities of the public accounting firm and the practitioner when they are considering accepting an audit engagement or continuing to provide audit engagement services to an existing client
assess clients’ integrity. sus integrity = hard to believe clients representation

Question 2

CAS 220 Quality Control for an Audit of Financial Statements

Answer 2

information should assist the engagement partner in determining whether the acceptance or continuance of a prospective client is appropriate

Question 3

CAS 210 Agreeing the Terms of Audit Engagements and CSQC 1

Answer 3

CAS 210 specifically identifies the following situations where a new client or an existing client should not be accepted unless required by law to do so:

• where management does not acknowledge its responsibilities in writing
• where the chosen financial reporting framework is not acceptable

Question 4

Client Integrity

Answer 4

• What is the reputation of the client in the business community? What is the reputation of the client’s management, directors, and key stakeholders?
• What is the client’s attitude toward risk? How does the client manage risk?
• Will the client be co-operative in providing the practitioner with access to information?
• What is the client’s attitude toward the audit fee?
• In the case of a client acceptance decision, why does the potential client want to switch audit firms?

Question 5

client acceptance and continuance stage

Answer 5

first stage
It is the stage where the auditor must review the threats to independence and ensure that safeguards are in place to reduce or remove those threats.

Question 6

Engagement letter

Answer 6

• the objective and scope of the audit of the financial statements
• the responsibilities of the practitioner
• the responsibilities of management
• identification of the applicable financial reporting framework for the preparation of the financial statements
• reference to the expected form and content of any reports to be issued by the practitioner and a statement that there may be circumstances in which a report may differ from its expected form and content
• the basis on which fees are computed and any billing arrangements