Engagement Acceptance Flashcards
Who does the external auditor report to and overseen by?
Audit committee
Who does the Sarbanes Oxley Act apply to?
Issuers
If the client is an issuer, the auditor must perform what type of audit?
Integrated audit
What does integrated audit consist of?
Financial statements and internal controls over financial reporting
The auditor should assess the following regarding client acceptance?
Firm’s ability to meet reporting deadlines, firm’s ability to staff the engagement, independence, integrity of client management, and group audits
What are the preconditions for an audit?
Applicable financial reporting framework and management responsibilities
What are the required contents for an engagement letter?
Objective and scope of the audit, auditor’s responsibility, management’s responsibilities, statement that because of the inherent limitations of an audit, identification of the applicable financial reporting framework, and reference to the expected form and content of any reports
What are the 3 types of fraud?
Financial statement fraud, asset misappropriation, and corruption
Should auditor communicate with the predecessor auditor before engagement acceptance?
Yes
Is client permission needed in order to contact the predecessor auditor?
Yes
Inquiries made to the predecessor auditor should regard?
Management integrity, disagreements with management, reasons for the change, and communication regarding fraud and illegal acts
During initial audits, the auditor’s responsibility regarding opening balances include?
Gaining appropriate audit evidence about whether opening balances contain misstatements and accounting policies reflected in the opening balances have been consistently applied in the current period, read the most recent financial statements
The inability of the auditor to obtain sufficient appropriate audit evidence regarding opening balances may result in what types of opinions?
Qualified or Disclaimer
