Chapter 5 Flashcards
What are some consequences of quality failure?
disciplinary consequences
What is the ICAEW membership scheme ‘Practice Assurance’?
All assets of a firms work are subject to periodic review by consultants acting for ICAEW.
this is a constructive review than disciplinary.
they consultants examine files and procedures in all departments, and compare with ICAEW standards, make recommendations where appropriate for improvement purposes.
Pre procedures to ensure quality control?
Procedures making sure only suitable clients taken on
Procedures making sure only suitable clients are retained
procedures ensuring firms staff have necessary knowledge and competence
guidance on ethics
communication skills
briefing and supervision skills are up to standards
professional scepticism and judgement
monitoring
What is the ISQC (UK) 1 ?
requires firm documents its policies and procedures and communicated them to firms personnel
What should management do to ensure the quality isn’t overlooked?
- commercial considerations don’t override quality of work performed
- adequate firm policies in relation to staff promotion, remuneration and performance review incorporate importance of quality work
- sufficient resources allocated to development, documentation and support of quality control policies and procedures
What should HR do to ensure with the allocation of staff to engagement teams?
Clients informed of identity and role of engagement partner
engagement partner has capabilities, competence, authority and time to perform the role
responsibilities of partner in respect of engagement are clearly defined and communicated to that partner
What is the engagement partner responsible for ensuring team members know?
What work they are supposed to be undertaking
Nature of the entity business
any relevant risks to the engagement
Problems that might arise during engagement
Detailed approach to the engagement
What is ISA (UK) 220?
Quality control for an audit of financial statements
Negatives of supervision?
If too close can stifle initiative and waste time of supervisor and assistant alike
I too loose mistakes made or time wasted in ineffective work
What is a hot review?
Review carried out by a partner not otherwise involved in the engagement or an external consultant before auditor report is signed. Not necessarily same as an engagement quality control review
What is a cold review?
once all the audit work has been concluded and required sufficient appropriate evidence obtained, conclusions drawn and reported
conducted by
Who’s is cold review undertaken by?
Partners in a firm review each others work
Team specifically constituted to conduct such reviews - (normally under direction of partner but work usually carried by suitably qualified and experienced managers)
by suitable qualified external consultant
