ISA 210 Flashcards
What is IAS 210 ?
It includes two Parts:
A) aceptance and continuance procedure
B) Agreeing the term of conditions.
What are the preconditions of Audit?
There are main two preconditions of audit:
1) AFRF is acceptable.
2) Management agrees on premise on which audit is conducted.
How auditor establishes whether preconditions are present?
1) Auditor shall determine that AFRF is acceptable considering:
a) Nature of entity
b) Nature of F/s
c) Perpose of F/s
d) Legal requirement
2) Auditor obtain agreement from management( via engagement letter) that it understand and acknowledge its responsibilities:
a) For preparation and presentation of F/s
b) For Internal controls which management and directers consider necessary for preperation of F/s that are free from material misstatement.
c) To provide auditor with:
*All relevent information.
* Additional information.
* Unresricted access to all personnel.
what are the course of action if any precondition is not present?
Auditor shall discuss with MGT.
What will be the course of action when AFRF is not acceptable?
Auditor shall notaccept the engagement ,unless is required by Law.
Auditor shall accept the engagement only if following conditions are met:
1) Mgt provide the additional disclosure to avoid F/s being misleading.
2) It is stated in term of engagement:
a) Audit report include Emphasis of matter paragraph in report to draw the user attention to additional disclosure.
b) Auditor openion shall not include the phrases “True and fair view” and “presented fairly in all material repect” unless required by law.
If AFRF is not acceptable but required by law and conditions also not met what will auditor do?
Auditor shall:
a) Evaluate the effect of misleading F/s on report.
b) Include referance to this matter in term of engagement.
If there is scope limitation before acceptance of engagement what will auditor do?
IF before acceptance of engagement,There is scope limitation by Mgt whose effect is pervasive(ie: not allowing to communicate with predesessor auditor) auditor shall not accept the proposed audit engagment unless required by Law.
what auditor shall agree with Mgt and directors in Audit engagement letter?
There are Five main conditions:
a) Objective and scope of audit
b) Responsibility of auditor
c) Responsiility of Mgt.
d) Identification of AFRF
e) A statement that “the there may be circumastances in which report may differ due to from its expected forms and content”.
What are the conditions that may include in audit engagemnet letter?
there are 9 Conditions that may include in audit report:
a) Elaboration of scope of audit.
b) Letter of weakness.
c) Communicate Key audit matter.
d) Fact that there may be undetected misstatement due to inherit limitation of Audit.
e) Arrangement regarding planning and performance of audit.
f) Expectation that management will provide:
1)Written representation.
2) Access to all relevent information.
3) Draft financial statement
4) Other information on timely basis
g) Fee or basis of fee and billing arrangement.
h) Agreement of management about susequent event affecting F/s.
What are the conditions that include in Audit engagement letter when relevent?
There are Five conditions:
a) Involvement of component auditor and expert.
b) Involvement of Internal auditor.
c) Involvement of predecessor auditor.
d) Reference to any further agreement b/w Auditor and Entity.
e) Obligation to provide audit Working paper to other party.
f) Restriction of auditor liability.
What are the agreeing term on recurring audit?
Auditor is not required to send engagement letter each period but only when there is chnge in circumstances:
a) Any misunderstanding that client misunderstand the objective and scope of audit engegement.
b) A recent change in senior Mgt.
c) Significant change in Owner ship.
d) Change in legal and regulatory requirement.
e) Significant change in nature and size of entities business.
f) Change in AFRF.
g) Change in other reporting requirement.
i) Any revised and special terms of audit engagement.
What are the agreeing terms on audit of component?
If auditor of parent entity is also the auditor of components, auditor shall consider the following factors:
a) Legal requirement.
b) Who appoint auditor of component.
c) wether a seprate report is to be issued on componenet.
d) Degree of independance of component management and degree of ownership by parent.
what are the main conditions when mgt request to change the terms if audit engagment?
Fators to consider:
a) Auditor shell consider wether there is reasonable
justification to do so.
What is resonable justification:
a) Change of circumstances that effect the need of services.
b) Misunderstanding as to nature of services origionally requestd.
what is not reasonable justification:
a) If it relate to information that is incorrect, incomplete and other-wise unsatisfactory.
If there is reasonable justification auditor shall revise the engagement
What auditor will do when management request to change the audit engagment to review or related services?
Fators to considered by Auditor:
a) wether there is a reasonable justification to do so.
b) Any legal and contractual implication for the change.
If there is resonable justification:
a) “Procedure to be performed” and “Report to be issued” shall be in accoradance with revised engagement.
b) Report shall not refer to:
1) Origional audit engagement
2) Any procedure performed in origional audit engagement. (except agreed upon procedures)
