CHAP 2: OBTAINING AN ENGAGEMENT

Question 1

what accountant do when tender for an audit

Answer 1

offer a quote for service, outlining the benefit of their firrm and personnel

Question 2

2 considerations trước khi auditor nhận 1 khách hàng mới

Answer 2

1, whether any independence or other ethical issues to cause significant problem with ethic code
2, Liệu auditor have been appointed in a proper and legal manner

Question 3

Key factor để evaluating ethical threat

Answer 3

whether it will be possible to contact the existing/predecessor accountant, in order to ask whether there are any reasons why the engagement should not be accepted

Question 4

Acceptance procedure mà proposed auditor must carry out

Answer 4

1,Ensure professionally qualified to act (Consider whether disqualified on legal or ethical grounds, for example if there would be a conflict of interest with another client)
2,Ensure existing resources adequate Consider available time, staff and technical expertise.
3,Obtain references
Make independent enquiries if directors not personally known.
4,Communicate with existing/predecessor auditors
Enquire whether there are reasons/circumstances behind the change which the new auditors ought to know, also as a matter of courtesy.

Question 5

When communicating with predecessor audit, if no reply is receive, auditor phải làm j

Answer 5

Auditor must still take other reasonable steps to obtain information about possible threats. They must also write to the existing accountant, by recorded delivery, stating their intention to accept
the engagement in the absence of a reply within a specific time period
Once these steps have been taken, then “the proposed accountant is entitled to assume that the existing accountant’s silence implies there was no adverse comment to be made” , they can still accept the engagement, as long as the other steps that they have taken satisfy them that any ethical threats are acceptable.

Question 6

When the client refuse to grant existing communicate with proposed auditor, cả client và proposed auditor phải làm j

Answer 6

Client should disclose this fact to the proposed auditor. The proposed auditor will then need to carefully consider whether to accept the audit.

Question 7

2 basic factor auditor phải consideration

Answer 7

 The integrity of those managing a company will be of great importance,
particularly if the company is controlled by one or a few dominant
personalities.
 The audit firm will also consider whether the client is likely to be high or
low risk to the firm in terms of being able to draw an appropriate assurance
conclusion in relation to that client.

Question 8

Ví dụ về low risk

Answer 8

Good long-term prospects
Well-financed
Strong internal controls
Conservative, prudent accounting policies
Competent, honest management
Few unusual transactions

Question 9

Ví dụ về high risk

Answer 9

Poor recent or forecast performance
Likely lack of finance
Significant control weaknesses
Evidence of questionable integrity, doubtful accounting policies
Lack of finance director
Significant unexplained transactions or transactions with connected companies

Question 10

Nếu risk level của 1 cuộc kiểm toán không phải là low risk, auditor và audit firm phải làm j

Answer 10

 specific risks should be identified and documented.
 assign specialists in response to these risks, particularly industry specialists, as
independent reviewers.
 Some audit firms have procedures for closely monitoring audits( 1 số cty giám sát chặt chẽ quá trình kiểm toán của cuộc kiểm toán có rủi ro cao)

Question 11

Expected fee của 1 cuộc kiểm toán thể hiện điều j

Answer 11

the expected fees from a new client should reflect the level of risk
expected

Question 12

Audit firm phải làm j để đảm bảo conflict of interest k xảy ra

Answer 12

no existing clients will cause difficulties as competitors of the new client

Question 13

Auditor nên lấy thông tin khách hàng từ đâu

Answer 13

1,Enquiries of other sources:Bankers, solicitors
2,Review of documents: most recent annual accounts, listing particulars, credit rating
3, Previous accountants/auditors: previous auditors should be invited to disclose fully all relevant information
4, Review of rules and standards: consider specific laws/standards that relate to industry

Question 14

Appointment decision chart

Answer 14

Dở sách ra xem

Question 15

3 procedures should be carried out after accepting nomination.

Answer 15

 Ensure that the outgoing auditors’ removal or resignation has been properly
conducted in accordance with national legislation.
 Ensure that the new auditors’ appointment is valid.
 Set up and submit a letter of engagement to the directors of the company

Question 16

Việc firm vẫn nợ fees previous auditor có ảnh hưởng đến việc appointment new auditor không

Answer 16

Không

Question 17

Once a new appointment has taken place, the new auditors should obtain cái j

Answer 17

1, obtain all books and papers which belong to the client from the outgoing auditors.
The outgoing auditorsshould ensure that all such documents are transferred promptly, unless they have a lien
(a legal right to hold on to them) because of unpaid fees.

Question 18

Các other assurance engagement( các dvu đảm bảo khác) thì các consideration có giống dvu audit không

Answer 18

The legal considerations relating to audit will not be relevant to other assurance
engagements, but the ethical, risk and practical considerations will be just as
valid

Question 19

How assurance firm comply with Money Laundring regulation

Answer 19

1, Assurance firms must keep certain records about clients and undertake what is known as client due diligence.
2, Mandatory to check the identity of all clients before any work is undertaken
when an ongoing relationship is envisaged or where a one-off transaction or a
series of transactions greater than €10,000 will take place.

Question 20

How to identify client

Answer 20

 For individuals: obtaining official documents including a photograph and
identifying the client’s full name and permanent address, for example, a passport supported by a number of utilities bills or a driving licence.
 For companies: obtaining similar legal information from the Registrar of
Companies; for example, a certificate of incorporation, the registered address and a
list of shareholders and directors.

Question 21

Client identification document phải giữ bn lâu

Answer 21

must be kept for a minimum of five years and until five years have elapsed since the relationship with the client in question has ceased. It is also necessary to keep a full audit trail of all transactions with the client.

Question 22

Client due diligence là j

Answer 22

thẩm định chi tiết 1 khách hàng để tránh các rủi ro trước khi nhận 1 khách hàng mới

Question 23

Purpose of engagement letter

Answer 23

1, define clearly extent of firm responsibility, minimise misunderstanding between client và firm( giảm expectation gap)
2, provide writen confirmation of firm acceptance for the appointment, the scope of engagement và form of report
firm ở đây là audit firm

Question 24

Định nghĩa audit engagement letter

Answer 24

A letter of engagement sets out the objectives, scope and responsibilities of
the audit. It outlines the reporting framework and the form of any reportsor opinions which may be given.

Question 25

Điều j xảy ra nếu k gửi engagement letter cho client

Answer 25

scope for argument about the precise extent of the respective obligations of the client and its directors and the auditors

Question 26

Engagement letter của các loại assurance engagement khác nhau có giống nhau k

Answer 26

Content giống nhau nhưng detail có thể khác nhau, dvu audit thì sẽ k ghi specific fee vô vì dvu audit là định kì

Question 27

Khi nào thì engagement letter được gửi tới client, các lưu ý khi làm engagement letter

Answer 27

 The auditors should send an engagement letter to all new clients soon after
their appointment as auditors and, in any event, before the commencement
of the first audit assignment.
 The elements of an engagement letter should be discussed and agreed with
management before it is sent.
 Any other form of appropriate contract, however, may be used.

Question 28

Những item shall be include( bắt buộc có) trong engagement letter

Answer 28

1,Objective of the audit of financial statements
2,Scope of the audit, which could include reference to applicable legislation,
regulations, or pronouncements of professional bodies to which the auditor
adheres
3,Auditor’s responsibility
4,Reporting framework that is applicable for the financial statements being
prepared, for example IFRSs. 5,Management’s responsibility to prepare the financial statements and to provide
the auditor with unrestricted access to whatever records, documentation and
other information is requested in connection with the audit
6,Form of any reports of results of the engagement

Question 29

Những item may wish to include( có thể có hoặc không) trong engagement letter

Answer 29

1,Form of any other communication of the results of the engagement
2,The fact that because of the test nature and other inherent limitations, there is
an unavoidable risk that some material misstatements may remain undiscovered 3, Arrangements regarding the planning of the audit
4, Expectation of receiving from management written confirmation of
representations
5, Agreement of the client to provide the auditor with information in time
6, Basis on which fees are computed and any billing arrangements
7, Request for the client to confirm the terms of the engagement by acknowledging receipt of the engagement letter

Question 30

Các points không bắt buộc trong engagement letter

Answer 30

1, Arrangements concerning the involvement of other auditors and experts in
some aspects of the audit
2, Arrangements concerning the involvement of internal auditors and other client
staff
3, Arrangements to be made with the predecessor auditor, if any, in the case of an
initial audit
4,Any restriction of the auditor’s liability when such possibility exists
5, A reference to any further agreements between the auditor and the client
6, Any obligations to provide audit working papers to other parties