Minor Areas Section B Rote 4

Question 1

Purpose of engagement quality review?

Answer 1

An objective evaluation, on or before the date of the auditor’s report, of the significant judgments the engagement team made

Question 2

Who is an engagement quality review for?

Answer 2

For audits of financial statements of listed entities

Question 3

Reviewer evaluation in engagement quality management review include (significant)

Answer 3

Discussion of significant matters with the engagement partner

Question 4

Reviewer evaluation in engagement quality management review include (FSs)

Answer 4

Review of FSs and proposed auditor’s report

Question 5

Reviewer evaluation in engagement quality management review include (working)

Answer 5

Review of selected working papers relating to significant judgments and conclusions

Question 6

Reviewer evaluation in engagement quality management review include (conclusions)

Answer 6

Evaluation of the conclusions reached and consideration whether the proposed auditor’s report is appropriate.

Question 7

For lsited entities in engagement quality management review?

Answer 7

Firm’s independence, whether there has been appropriate consultation on contentious matters

Question 8

Procedures for interim audit (inherent)

Answer 8

Inherent risk assessment and gaining understanding of entity

Question 9

Procedures for interim audit (internal)

Answer 9

Documenting and evaluating the entity’s system of internal control

Question 10

Procedures for interim audit (substantive)

Answer 10

Performing substantive testing of PL transactions to gain evidence that books and records are reliable basis for prep of FSs

Question 11

Procedure for final audit

Answer 11

Substantive procedures involving verification SFP balance and SPL amounts

Question 12

Steps to confirm prior year flowcharts and system notes (audit file)

Answer 12

Review audit file for indications of weaknessses in system and note these for investigation this year

Question 13

Steps to confirm prior year flowcharts and system notes (system)

Answer 13

Obtain system documentation from client, potentially in form of a procedure manual

Question 14

Steps to confirm prior year flowcharts and system notes (client)

Answer 14

Inteview client staff to ascertain whether systems and controls have changed including the stores and warehouses. Enusirng flowcharts and notes produced last year are correct

Question 15

Steps to confirm prior year flowcharts and system notes (walk-through)

Answer 15

Perform walk-through tests by tracing a sample of transactions through purchases and payables system to ensure that flowcharts and sustems nptes contained on audit file are accurate

Question 16

Components of a system of internal control (control)

Answer 16

Control environment

Question 17

Components of a system of internal control (risk)

Answer 17

The entity’s risk assessment process

Question 18

Components of a system of internal control (internal)

Answer 18

The entity’s process to monitor the system of internal control

Question 19

Components of a system of internal control (communication)

Answer 19

The information system and communication

Question 20

What is big data?

Answer 20

A broad term for larger, more complex datasets that can be held by modern computers

Question 21

What is data analytics?

Answer 21

Examination of data to try to identify patterns, trends or correlations

Question 22

How can data analytics improve audit process (all)

Answer 22

Offer the chance of examining all of an entity’s data. This in turn should improve both audit efficiency and audit quality

Question 23

How can data analytics improve audit process (quantities)

Answer 23

Large quantities of data can be interrogated relatively quickly, allowing auditors to focus immediately on the riskiest areas

Question 24

Example of how auditors might use data analytics (inventory)

Answer 24

To calculate inventory ageing and how many da inventory is held by product/item

Question 25

Example of how auditors might use data analytics (recalculations)

Answer 25

Detailed recalculations of depreciation on non-current assets by item