Obtaining Engagement

Question 1

Acceptance procedures (4)

Answer 1

• ensure professionally qualified to act
• ensure existing resources adequate
• obtain references
• communicate with present auditors

Question 2

Low risk clients (6)

Answer 2

• good long-term prospects
• well-financed
• strong internal controls
• conservative, prudent accounting policies
• competent, honest management
• few unusual transactions

Question 3

High risk clients (6)

Answer 3

• poor recent or forecast performance
• likely lack of finance
• significant control weaknesses
• evidence of questionable integrity, doubtful accounting policies
• lack of finance director
• significant unexplained transactions or transactions with connected companies