Pre-Engagement Planning Issues Flashcards
What is meant by the term “preconditions for an audit”?
The use by management of an acceptable financial reporting framework in the preparation of the financial statements and the agreement of management to the premise on which an audit is conducted
What matters should be covered in the (successor) auditor’s inquiry of the predecessor auditor?
- )Facts related to management’s integrity
- )Significant accounting or auditing disagreements
- )Any communications with the audit committee (or others charged with governance) about fraud, illegal acts, and significant deficiencies in internal control matters
- )Predecessor’s understanding of the reason(s) for the client’s change in auditors
What is meant by the term “initial audit”?
The prior year’s financial statements have been audited by a predecessor auditor.
Who initiates the communications between the predecessor auditor and successor auditor?
The successor auditor initiates the communication with the predecessor by requesting that the client authorize the predecessor auditor to allow the successor auditor to review the predecessor auditor’s working papers.
What matters are typically addressed in an engagement letter?
- )The objective and scope of the audit
- )The auditor’s responsibilities
- )Management’s responsibilities
- )A statement about the inherent limitations of an audit
- )A statement identifying the applicable financial reporting framework
- )Reference to the expected content of any reports to be issued
- )Other matters, as warranted (e.g., fees, etc.)