chapter 3 accepting and managing engagements Flashcards

Question 1

Q

quality control - the need, and what could go wrong (engagement partner, the client, individual auditor and the supervisor)

Answer

A

engagement partner:

may have insufficient knowledge of client and environment
may fail to pass knowledge to audit team]
may select wrong audit team
may not adequately brief and supervise team
may not consult sufficiently with colleagues and outside experts
may not review work with sufficient care
may fail to deal with issues raised adequately
may not draw correct conclusions from audit

the client:
-could be incompetent, negligent or may even attempt to mislead the audit team

Individual auditor :

May not have adequate understanding of the clients business
may not perform the right work to an adequate standard
may not record the work done adequately

The supervisor:

may not have adequate understanding of clients business
may not brief and direct staff properly
may not carry out sufficient supervision so that the wrong work is done by the audit team
may fail to deal with issues adequately
may fail to communicate issues to engagement partner

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Question 2

Q

approach to quality control

Answer

A

a) procedures to ensure SUITABLE clients taken on
b) procedures to ensure only SUITABLE clients are retained
c) procedures for ensuring the firms partners and staff have the necessary competence and knowledge
d) guidance and ethics
e) communication skills
f) briefing and supervision skills
g) professional scepticism and judgement
h) monitoring

Question 3

Q

ISQC 1 QUALITY control for firms that perform audits and reviews of financial statements and other assurance and related services engagements

Answer

A

elements of a firms quality control system

leadership responsibilities for quality within the firm

ethical requirements

acceptance and continuance of client relationships and specific engagements

Human resources

Engagement performance

Monitoring

Question 4

Q