MODULE 14

Question 1

What’s an Engagement letter?

Answer 1

Engagement letter is like a contract between the practitioner and the client serving to protect both parties and reduce the risk of misunderstandings in relation to the engagement

Question 2

What are the elements which must be included in the engagement letter

Answer 2

1. Objective ans scope of the audit
2. Responsibilities of the auditor
3. Responsibilities of management
4. Identifying the applicable accounting framework
5. Expected form and content of any reports

Question 3

Why may a firm issue a new engagement letter?

Answer 3

In case there are any misunderstandings ion the objectivity and/or scope of the audit, or if anything has changed

Question 4

What’s the Audit Summary Memorandum?

Answer 4

The Ausit Summary Memorandum summarises the key delicious made during the planning phase

Question 5

What typical content will be in the Audit summary Memorandum?

Answer 5

Client Background info
Systems and Control Info
Staffing and key client Contacts
Materiality
Analytical Procedures
Risk Assessment findings and procedures
Timetable

Question 6

What should the Quality Control review include?

Answer 6

1. Discussions of significant matters
2. Review of financial statement and proposed Audit Report
3. Review of Audit documentation which was used to reach certain judgements
4. Evaluation of whether the conclusion reached to support the audit report is appropriate
5. Consideration of Engagement teams assessment of the firms independence from the client
6. Assessment on whether appropriate conclusions have taken place
7. Reviewing whether Audit documentation selected reflects the work performed and supports judgements and conclusion reached