week five

Question 1

what is the structure of the overall audit approach?

Answer 1

-what framework is used
-knowledge of the industry and business
-work of an internal audit team
-areas of finance outsourced
-can we make use of computer assisted technology
-availability of key client personnel

Question 2

what are the significant factors and preliminary engagement activities for audit strategy?

Answer 2

-materiality
-risk assessments
-need for internal control
-need for scepticism
-changes in law and regulation

Question 3

what is the audit strategy for reporting objectives, timings and communications?

Answer 3

-timetable for reporting
-communicating with clients

Question 4

what is the adult strategy for nature, timing and extent of resources?

Answer 4

-budget

Question 5

what should the audit plan include?

Answer 5

-what test to be performed
-who does the work
-how much work should be done
-when should the work be done by

Question 6

what is the purpose and timings of an interim audit?

Answer 6

-it is completed part way through the year
- makes sure sufficient work is covered
-makes sure it doesn’t interfere with year end procedures

-its main purpose is to spread out auditors work to help them cope with a strict deadline

Question 7

what work is performed in an interim audit?

Answer 7

-document system
-evaluate controls
-detailed testings

Question 8

what impact does the interim audit have on the final audit?

Answer 8

-if controls are working well = less testings needed in the final audit

-if controls are not working well = more testings would be needed

Question 9

when is the final audit handed in?

Answer 9

the final audit is handed in at the end of the financial period for the company, just before the financial statements are submitted, auditors are required to give a true and fair view of the financial statements.

Question 10

what work is produced in the final audit?

Answer 10

-test whether audit sofp balances
-test the transaction tested in the interim audit
-audit year end journals and adjustments
-ensures controls tested in the interim audit still operate.
-look at going concern
-verify the financial statements
-communicate with managements regarding misstatements

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Question 11

what are the two types of fraud?

Answer 11

fraudulent financial reporting: when intentionally manipulating the financial statements through misstatements.

misappropriation: when something is stolen from the company such as assets

Question 12

error=?

Answer 12

an unintentional misstatement

Question 13

what is the directors reponsibility to prevent fraud?

Answer 13

implement effective internal controls

create a culture that reduces the risk of fraud

consider the need and role of an internal audit team

Question 14

what is the auditors responsibility when it comes to fraud and error

Answer 14

to give a fair opinion if the financial statements are free form material misstatements

to be professionally sceptical

Question 15

what is the role of management and auditors when it comes to fraud and error?

Answer 15

-discuss if there should be any incentives from the company
-discuss with he audit team the risk of fraud
-ask management if they have effective internal controls
-ask management what measures they have set in place
-ask management if they are aware of fraud

Question 16

what is an auditors response if fraud and error is detected?

Answer 16

-obtain written representations rom management to show fraud has been committed
-test year end journals and adjustments
-make audit procedures unpredictable
-use more experienced staff

Question 17

who is fraud reported to?

Answer 17

-management
-those who govern the company
-relevant third party
-shareholders if it affects decisions

Question 18

what is a directors responsibility when it comes to laws and regulation?

Answer 18

-make sure the company follows the laws and regulation
-keeps up with changes in law
-make sure there is effective control in order to ensure legislation is followed

Question 19

what is the auditors responsibility when it comes to law and regulation?

Answer 19

-run enough tests to make sure laws and regulations are adhered to

-respond correctly if non-compliance is found

Question 20

audit procedures for laws and regulations:

Answer 20

-study relevant laws and regulations that may apply to the company
- inspect correspondence with regulatory authority
-ask management if there has been compliant issues
-do relevant testings such as inspecting board minutes

Question 21

What are the ethical standards for responding to non-compliance?

Answer 21

-provide guidance to accountants to become aware of illegal acts.
-addresses the duty of confidentiality
-auditors need to speak to management and encourage self-reporting
-if this doesn’t work, they need to report it themselves.

Question 22

what is the quality control for leadership?

Answer 22

the audit partner takes overall responsibility for the quality of the audit and ensures:

-compliance with ethical requirement
-appropriate acceptance and continuance
-compentent engageant team
-appropriate reviews have been doen
-sufficient evidence has been collected
-sufficient consultation

Question 23

what does engagement performance- direction ensure?

Answer 23

team members known their responsibility

Question 24

what does engagement performance - supervision ensure?

Answer 24

-track the progress of th audit
-monitor competence
-address significant matters
-arrange consultation

Question 25

what is the purpose of ECQR?

Answer 25

-PLC are subject to an independent review and the reviewer should:

-have enough qualification
-be objective

Question 26

what does an ECQR include:

Answer 26

-discuss significant matter with he audit partner

-review the financial statmenent and audit report

Question 27

what are the reviews of a ECQR?

Answer 27

-significant risks and judgements
-significant uncorrected misstatements
-matters communicated with management and regulatory bodies
-conclusions made in forming audit opinion
-the independence of the team
-if appropriate consultation has been sought
-whether the documented audit work supports the conclusions made