Tender & Acceptance

Question 1

What is the mnemonic for remembering the matters to be considered when tendering or accepting audit work?

Answer 1

TRIMROT

Question 2

What factor does the ‘T’ stand for?
Provide matters to consider and the procedures to address this.

Answer 2

Technical competence

MTC: Does the firm have skills / expertise for the work / in the industry e.g Crypto.

Procedure: Review team profiles / training / need for an expert?

Question 3

What factor does the ‘R’ stand for?
Provide matters to consider and the procedures to address this.

Answer 3

Resources

MTC: Is there enough staff available?

Procedure: Review staff planner / timetable / speak with senior members to seek available staff.

Question 4

What factor does the ‘I’ stand for?
Provide matters to consider and the procedures to address this.

Answer 4

Independence

MTC: Are there ethical threats, are all personal acting with independence, can threats be overcome?

Procedure: Implement safeguards (T2)
Consult ethics partner, call ICAEW helpline for advice.

Question 5

What factor does the ‘M’ stand for?
Provide matters to consider and the procedures to address this.

Answer 5

Money Laundering

MTC: Are there initial indications of ML e.g. strange / unusual transactions.

Procedure: Client ID Checks

Question 6

What factor does the ‘R’ stand for?
Provide matters to consider and the procedures to address this.

Answer 6

References / Risk (management integrity)

MTC: What is the directors background? Can we rely on the work they produce / provide to us?

Procedure: Background checks, credit checks

Question 7

What factor does the ‘O’ stand for?
Provide matters to consider and the procedures to address this.

Answer 7

Outgoing Auditors

MTC: Why did they resign / removed?

Procedure: 7 step procedure

Question 8

What factor does the ‘T’ stand for?
Provide matters to consider and the procedures to address this.

Answer 8

Terms of engagement

MTC: Is it an Audit or another type of assurance such as Forecast?
Terms of engagement should be easy for an audit but may need clarification for others.

Procedure: Obtain a signed engagement letter.

Question 9

What are the Factors that an ENTITY should consider when evaluating a firm’s Tender?

Answer 9

> Audit fee - BVFM
Personnel on the audit team - efficiency / expertise (technical competence & resources)
Timetable - busy season?
CoI - confidentiality
Additional services - efficiency / quality

Question 10

What is the 7 step procedure when contacting outgoing auditors (OA)?

Answer 10

1. Explain to client there is a duty to contact OA
2. Obtain client’s permission to contact
3. Not given = do not accept audit
4. Send letter to OA
5. OA replies mentioning anything untoward.
6. If not reply, chase
7. No reply - send OA a letter informing them you take their silence as evidence there were no issues and intend to perform audit.