Controls

Question 1

What general recommendations can you give to management when a procedure isn’t being adhered to properly?

Answer 1

• employees to be made aware of the importance of adhering to company policy
• monitoring of procedures to ensure adherence
• breaches to be investigated and staff disciplined

Question 2

In a first year, new industry client, what should you do to mitigate risk?

Answer 2

• exercise higher professional scepticism
• use or recruit senior staff with industry experience
• spend time researching the industry
• exercise closer supervision over junior staff
• perform expanded reviews of audit work
• obtain more relevant and reliable audit evidence by placing more emphasis on third party evidence
• lower materiality
• increase sample sizes
• review previous auditors work
• undertake substantive procedures on opening balances