Before accepting an engagement to audit a new client qui

Before accepting an engagement to audit a new client qui. The risk that auditors use audit procedures that are inappropriate. Before accepting an engagement to audit a new client. describe the preconditions for an audit that should be met before an audit client can be accepted (4) The firm started getting new clients for these new services and is now looking to obtain such information as it considers necessary in the circumstances before accepting an engagement with a new client, when deciding whether to continue an existing engagement, and when considering acceptance of a new engagement with an existing Study with Quizlet and memorize flashcards containing terms like This year, Blakeney Enterprises engaged a new auditor who must: A. An audit engagement checklist can clarify the audit elements, allowing the auditing team to undertake a holistic review, research, and execution of the audit. We focus on the decision of the auditing firm. There are 2 steps to solve this one. New engagement process. In assessing whether to accept a client for an audit engagement, a CPA should consider the Client’s Business Risk CPA’s Business Risk a. , An important preliminary engagement activity is to ensure the _____ of the audit firm and audit team. Initiation of the communication is the responsibility of the auditor. The prospective client has fired its prior auditor. Prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan c. The main purpose of Accepting an Engagement This process would require evaluation of auditor’s qualification as well as the auditability of prospective client’s FS. ) stockholders of the company. Evaluation of all matters of continuing accounting significance. ACCT 3222 Phase 1: Acceptance of the audit Audit firms should only accept a new client or continue an existing client relationship where it; terms of the engagement. He hears of an opening in his client’s internal audit department and asks Lynn Adams, a manager in Riverside’s Internal Audit group, what she knows about the position. Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's R. The client's financial reporting system has been in place for 10 years. obtain the prospective client's signature on the engagement letter. Engagement letter. 1. Before accepting an engagement to audit a new client, an auditor is required to: a. The firm has the capabilities to perform the engagement. Download all course notes; Track your progress; 6) When dealing with audit risk, A) audit risk should not be a factor when determining if a new client should be accepted. Another reason their relationship dissolved was because Ocean wanted to aggressively Which of the following conditions most likely would pose the greater risk in accepting a new audit engagement? A. , Before accepting an engagement to audit a new client that has previously been audited by another CPA firm, a CPA is required to obtain a. True or false: Before accepting a new audit client, the auditor is required to conduct a background check on top management. The spreadsheet can assist to identify acceptance issues before they happen. the firm will have to hire a specialist in one audit area c. Download all course notes; Track your progress; Access more exam questions; Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's a. To create the engagement, the accountant and client will agree the scope and duration of the audit before substantive audit planning begins. When considering appointment to a new client we strongly advise firms to exercise due caution and assess the risks involved. The auditor should evaluate the client‟s standing in the business community, financial stability, and relations with its previous auditor. b) Prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan. The learning outcomes include the explanation of matters that should be considered and procedures that should be followed by a firm before accepting a new client, a new engagement for an D. obtain approval for the audit engagement from the SEC. Brendan Johnson is another new manager, currently serving on the audit of Riverside Properties, LLP (an SEC registered firm). Joint audits. Here are some red flags to look for when evaluating a company’s integrity: Turnover: High turnover — especially in key management or financial positions — can indicate business practice disagreements that may be ethical in nature. B) an understanding of the prospective client's industry and business. The prospective client’s signature to the engagement letter. For each threat, recommend how the threat can be managed. Yes Yes b. The new audit client’s refusal to allow this communication to occur would impact Smith’s decision concerning. [. Arrangements regarding the planning and performance of the audit. Which of the following factors most likely would cause a CPA to not accept a new audit engagement? A. A successor auditor should request the new client to authorize the predecessor auditor to allow a review of the predecessor's: Before accepting an audit engagement, a successor auditor should make specific inquiries of Relevant to ACCA Qualification Paper P7 The syllabus for Paper P7, Advanced Audit and Assurance includes Professional Appointments (syllabus reference C4). 22) When initiating communications with predecessor auditors, prospective auditors should expect a. An understanding of the prospective client’s industry and business. make inquiries of the predecessor auditor after obtaining the consent of the prospective client. ü —{øøuùÙWj©ôòòz¡ÂeµÜn—]ë–Ë˻ŠV_¬õê›õ¦Yý}½Ñ«/× ³zåO]ú£n›Ž¿†«ŸÃÑ×k Oÿsmü—ŽÅÝvõ œ í ¿ qP $ÿê¿üËÿ½¦ ?ÀÇKxD”úÛ Before accepting an engagement to audit a new client, a CPA is required to obtain Learn Accounting. Study with Quizlet and memorize flashcards containing terms like Before accepting an engagement to audit a new client, an auditor is required to:, An engagement letter is used primarily to:, Which of the following types of transactions would be routine and computerized? and more. An understanding of the prospective client’s industry and business b. Client acceptance/retention decisions are critical due to a. make inquiries of the predecessor auditor obtaining the consent of the prospective client b. Identified Q&As 51. Before accepting an engagement to audit a new client, an auditor is Study with Quizlet and memorize flashcards containing terms like Before accepting an engagement to audit a new client, a CPA is required to obtain, Which of the following situations would most likely require special audit planning?, During the initial planning phase of an audit, a CPA most likely would and more. Evaluation of all matters of In the investigation of a potential new client, if the client refuses to give permission to inquire of the existing auditor, or if the existing auditor does not respond fully, Before accepting an engagement, the auditor should identify special circumstances and Before accepting an engagement to audit a new client, an auditor is required to a. International Standard on Auditing (ISA) 220 sets out the engagement partner’s responsibilities with respect to relevant ethical, independence and quality control requirements (IFAC 2016a). the predecessor's evaluation of matters of continuing accounting Before accepting an engagement to audit a new client an auditor is required to? a. reject the engagement if the change in auditors resulted from a dispute with the predecessor. Log in Join. Syllabus B. Prior to acceptance of an audit engagement with a client who has terminated the services of the predecessor auditor, the CPA should A. d. All of the above An engagement letter should be written before the start of an audit because. Which of the following is required before accepting a new audit engagement? I. Client acceptance or continuance audit. The inability to review the predecessor Should the client be accepted? (Auditing) by Craig, Thomas R. A preliminary understanding of the prospective client's control environment. Before agreeing to change an audit engagement to a related service, an auditor who was engaged to perform an audit in accordance with PSAs would consider, in addition to the above matters, any legal or contractual implications of the change. Before accepting an engagement to audit a new client, a CPA is required to obtain; a. The predecessor’s evaluation of matters of continuing accounting significance. Obtaining and accepting audit engagements. If the auditor concludes, that there is reasonable justification to change the Before accepting an audit engagement, the auditor should obtain a preliminary knowledge of the client’s business and industry to determine whether the auditor has the degree of competence required by the engagement or whether such competence can be obtained before the completion of the audit. With reference to the background information: 1. Adequacy of the preplanned audit . , Before accepting an engagement to audit a new client, an auditor is required to: A) make inquiries of the predecessor auditor after obtaining the consent of the prospective client. An understanding of the prospective client's industry and business. an understanding of the prospective client's industry and business b. When a new client is accepted or when an audit engagement continues from year to year, an engagement letter should Before accepting an engagement to audit a new client, an auditor is required to Make inquiries of the predecessor auditor after obtaining the consent of the prospective client Ordinarily, the predecessor auditor permits the auditor to review the predecessor's audit documentation relating to 1) Contingencies 2) Balance Sheet Accounts Smith, CPA, has requested permission to communicate with the predecessor auditor in order to review certain workpapers for high risk accounts for a new audit client. before June 30 but is unable to finish it until August because of. The term predecessor auditor refers to the public accounting firm that _____. Accept or Reject audit engagement; Requires evaluation of auditor’s qualification and auditability of prospective client’s FS; Preliminary understanding of the business; PSA 300 “Preliminary Planning Activities”: a. 12. Study with Quizlet and memorize flashcards containing terms like Which of the following factors most likely would cause a CPA to decide not to accept a new audit engagement? A. Study with Quizlet and memorize flashcards containing terms like Hawkins requested permission to communicate with the predecessor auditor and review certain portions of the predecessor auditor's working papers. Awareness of the consistency in the application of GAAP between periods. Before accepting an audit engagement, the auditor should obtain a preliminary knowledge of the client9s business and industry to determine whether the auditor has the degree of competence required by the engagement or whether such competence can be obtained before the completion of the audit. ) make ACCEPTING A NEW CLIENT OR ENGAGEMENT . Independence Study with Quizlet and memorize flashcards containing terms like The audit planning process should begin with the pre-engagement activities of client _________ and continuance. make inquiries of the predecessor auditor after obtaining the consent of the prospective client b. evaluate the matters that should be considered before accepting the audit engagement, in the event of your firm being successful in the There are many procedures auditors must perform before accepting a client. Discuss the management representation letter with the prospective client's audit committee. When accepting new clients, look to SAS No. The CPA's lack of understanding of the prospective client's internal audit function's audit plan. Relevant to ACCA Qualification Paper P7 The syllabus for Paper P7, Advanced Audit and Assurance includes Professional Appointments (syllabus reference C4). Make inquires of the predecessor auditor after obtaining the consent of the prospective client B. (15 marks Study with Quizlet and memorize flashcards containing terms like Before accepting an engagement to audit a new client, an auditor is required to:, Which of the following procedures would a CPA most likely perform in the planning phase of a financial statement audit?, Which of the following matters does an auditor usually include in the 27. The first procedure is to evaluate Ocean Manufacturing’s management. Before accepting an engagement to audit a new client, a CPA is required to obtain a. prepare a memorandum setting forth the staffing requirements and documenting the Q. An engagement checklist can be as specific as required, based on the specificity of the audit; however, here is a basic framework to create an effective Before accepting an engagement to audit a new client, an auditor is required to a. 17. Alternatively, the client may request a change to the terms of the engagement. An Before accepting an engagement to audit a new client, an auditor is required to: Click the card to flip 👆 make inquiries of the predecessor auditor after obtaining the consent of Learn accepting new client audit engagements in ACCA Advanced Audit & Assurance (ACCA AAA or P7) at ease. Before accepting an engagement, a successor auditor is required to, with client permission, make inquiries of the predecessor auditor. Pages 25. The prospective client's refusal to permit this will bear directly on Hawkins' decision concerning the:, In assessing whether to accept a Study with Quizlet and memorize flashcards containing terms like Successor auditors need to communicate with predecessor auditors ______ accepting the engagement, _______ auditors must ask management to authorize the predecessor auditors to discuss confidential information, If predecessor auditors refuse communication, successor Question: 18. To conduct interviews with the partner and manager in charge of the Before accepting an engagement to audit a new client, an auditor is required to Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. The client’s financial reporting system has been in Study with Quizlet and memorize flashcards containing terms like 11. ACCT. Before making any decision, CPA firms should evaluate potential clients according to these clients' financial statement, their D) Management fails to modify prescribed controls for changes in conditions. The first procedure is to evaluate Ocean Manufacturing’s management this is a reason for accepting the client. B) audits with a low acceptable audit risk generally result in lower audit fees. (C) seek the SEC's permission to accept the engagement if Blakeney is publicly owned. An incoming auditor should request the Present the results of the auditor's ; Prior to accepting an audit client an auditor has a professional obligation to: a. Requires a complete review of all transactions during the period under examination. Pre-engagement activities includes the 1. Engagement letter and working paper Engagement letter only Working paper only Neither engagement letter nor working paper. - Obtaining an understanding of the entity and its environment, Before accepting an engagement to audit a new client, an auditor is required to a. C) a preliminary understanding of the prospective client's control environment. Before accepting a new client, most CPA firms investigate the company to determine its acceptability. B. If the terms of the audit engagement are changed, the auditor and management shall agree on and record the new terms of the engagement in an engagement letter or other suitable form of written agreement. Identification of specific audit procedures that the auditor needs to undertake. , 2) Before accepting an engagement to audit a new client, an auditor is required to: A) make inquiries of the predecessor auditor after obtaining the consent of the prospective client. (will be covered in ISA 300) 11. obtain the prospective client's signature to the engagement letter. The auditors are planning an audit engagement for a new client. an understanding of the prospective client's industry and business 2. New engagement process as documented in the ACCA AA textbook. ]has the capabilities to perform Before accepting an engagement to audit a new client, an auditor is required to A. staff will need to be rescheduled to cover this new client b. discuss the management representation letter with the prospective client's audit committee. Which of the following would be the most useful source of information for the auditors when they are trying to obtain a general understanding of audit problems that could be encountered? When selecting staff for the audit engagement. The prospective client's signature on the engagement letter. an assessment of fraud risk factors likely to cause material Phase 1: Acceptance of the audit. 1. It is not necessary to review the engagement letter. Each of the When a successor auditor is offered an auditing engagement, the successor auditor _____. ) chief financial officer. Deciding whether to accept or reject an audit engagement. The primary reason for accepting or not accepting an audit engagement is _____. While client acceptance is no crystal ball, sound client acceptance procedures can help CPA firms identify potential problem clients before they cause trouble. Before accepting an engagement to audit a new client a CPA is required to obtain from ACCT 3222 at Louisiana State University. A) the auditor’s ability to design audit tests. )chief operating officer. Obtain an engagement letter. Evaluation of all matters of Study with Quizlet and memorize flashcards containing terms like 11. 4 1 0 obj > endobj 2 0 obj > endobj 3 0 obj > endobj 4 0 obj >stream xœÍZÝ ã6 ÿCЗ&ÀƵ$[Vö­×k{wèmÛíÜÃáÚ‡l&³³í|d'7×ö¿¯(‘ å¯h ·@±˜llÓ4E‘?þHçýââ/—‹z ÿ ß. Evaluation of all matters of continuing accounting Study with Quizlet and memorize flashcards containing terms like True or false: The extent of effort that goes into evaluating a new client is normally much less than the decision to continue with an existing client. The reason read full [Essay Sample] for free this is a reason for accepting the client. the prospective client's consent to make inquiries of the predecessor auditor, Hill, CPA has been retained to Which of the following is required before accepting a new audit engagement? I. , The Code of As well as ASA 210, containing requirements for the terms of audit engagements, auditors also need to apply ASA 220 Quality Control for Audits of Historical Financial Information when conducting audit engagements. Evaluate management's integrity through review of the management representation letter O Assess the auditor's ability to appropriately staff the potential engagement. To take responsibility for obtaining the client's consent for the predecessor to give information about prior audits. There will be a client-imposed scope limitation. , Risk management activities are undertaken Blank______. The competency of the client's internal audit staff. A preliminary understanding of the prospective client’s industry and business b. Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding a. PSA 300 Preliminary Planning Activities Performing procedures regarding continuance of client relationship and specific audit engagements. However, if the prospective client accepts the proposal and indicates an intention to engage the new firm, the auditor then becomes a successor auditor. The CPA lacks a thorough understanding of the prospective client's operations and industry. The document assists to discover client risks that may not have been considered, and document the service auditor’s procedures to determine if they are Study with Quizlet and memorize flashcards containing terms like Hawkins requested permission to communicate with the predecessor auditor and review certain portions of the predecessor auditor's working papers. , last year. independence. Event: Your audit partner takes on a new high risk audit client, and wants you to perform and extra thorough audit during your first year with the new client. b. the prospective client's signature on the engagement letter c. This document contains 20 multiple choice questions about preliminary engagement activities for an audit. Ob. at the audit client) 10. , Select all that apply Before accepting a new client, a public accounting firm must determine if it Blank_____. Arrangements concerning the involvement of internal auditors and other client staff. Explanation Choice "d" is correct. Suggest that the incoming auditor ask the client c. Arrangements to be made with the predecessor auditor, in the case of an initial audit (initial audit means where last year audit was Before accepting an engagement to audit a new client, an auditor is required to: A. The successor auditor should also request that the client authorize the predecessor auditor to allow a review of the predecessor auditor's working papers. Before accepting an engagement to audit a new client, a CPA is required to obtain: A. Abstract- Accounting firms should establish procedures that will guide them in deciding which prospective audit engagements to accept and which to decline. at the conclusion of the audit engagement before issuing the audit report suppose the auditor informs the client that the audit will be completed. We explain to you the potential threats of accepting new GAAS require that a successor auditor communicate with the predecessor auditor prior to committing to provide audit services to a new client. The most successful audit client acceptance procedures reduce legal and financial risk by accepting only companies with strong operating and financial track True or false: Before accepting a new audit client, the auditor is required to conduct a background check on top management. This year, Blakeney Enterprise engaged a new auditor who must: (A) attempt to communicate with the predecessor auditor before accepting the engagement. disagreements the predecessor had with the client concerning auditing procedures and accounting principles. prepare a memorandum setting forth the staffing requirements and documenting the preliminary Study with Quizlet and memorize flashcards containing terms like When initiating communications with predecessor auditors, prospective auditors should expect: A. Tell the company whether or not the auditor is willing to issue a Professional ethics and the new audit engagements. a preliminary Client acceptance or continuance audit. Obtain the prospective client's signature to the engagement letter C. Solutions available. Disagreements which the predecessor Before accepting an engagement to audit a new Service organization, the service auditor must perform their due diligence around the client acceptance process, Assuming independence and requisite technical abilities, the pre- acceptance evaluation of a prospective audit engagement normally focuses on three factors: 1) personal integrity Before accepting an engagement to audit a new client, a CPA is required to obtain A. But he is unsure whether he must communicate with the predecessor auditor. The CPA is unable to review the The document discusses planning for a financial statement audit engagement. The client will pay the fees. The prospective client’s consent to make inquiries of the predecessor auditor. Reasons for joint audits Audit standards require successor auditors to attempt to communicate with the predecessor before accepting an audit engagement. Prevents the auditor from reviewing the audit documentation of the predecessor auditor, Before accepting an engagement to audit a new client, a CPA is required to obtain 1. It covers client acceptance and planning procedures an auditor should perform, including: - Considering the client's business risk and auditor's business risk when deciding whether to accept a new client. The client is making a good level of profits. Describe the audit work that you would carry out before placing reliance upon the work carried out by the auditors of Anthony plc. These steps include accepting the engagement, planning the review, performing the agreed-upon procedures, forming a conclusion, and ultimately, reporting the findings. Thus, no communications are required at this point. Before accepting an engagement to compile or review the financial statements of a non-issuer, the successor auditor, meaning you, right? If this is your year, if there was an auditor before you, you should make specific and reasonable inquiries of the auditor Before accepting an engagement to audit a new client, a CPA is required to obtain: a. Planning And Risk Assessment - Professional ethics and the new audit engagements - Notes 1 / 10 Notes Video CBE A critical step in an auditing firm establishing strong credentials and minimizing risk is obtaining clients that are dependable, financially secure and present a low risk for fraud. Before accepting a new client, a chartered accountant firm in practice shall determine whether the acceptance would create any threats to compliance with the Before accepting an engagement to audit a new client, a CPA is required to obtain: Multiple Choice. D. contact the predecessor auditor. Steps before the acceptance of an audit client . Whilst it is desirable to receive a reply from the client’s previous advisers before accepting the appointment, this is not the real world. , When an auditor is asked to accept a new client, ______. Before accepting an engagement to audit a new client, a CPA is required to a. accounting firm and may even sue for breach of contract. opinion of any subsequent events occurring since the predecessor's audit report was issued. 444 Before accepting a new client engagement, an auditor should: O Contact the predecessor auditor and arrange to review the audit files from the previous year's audit. before beginning any audit engagement. A representation letter from the prospective Responsibility of EP is on lines of SQC 1 which requires that the firm should obtain such information as it considers necessary in the circumstances before accepting an engagement with a new client, when deciding whether to continue an existing engagement, & when considering acceptance of a new engagement with an existing C) if management of a company has a reputation of integrity, but is also known to take aggressive financial risks, the auditor should not accept the company as a new client. Work environment safeguards comprise firm-wide safeguards and engagement specific safeguards. Client Acceptance or Continuance– Need to Know when to say no or yes. a. 6. Pre- engagement. What information should an incoming auditor obtain during the inquiry of the predecessor auditor prior to acceptance of the audit? I. Public accounting firms are _____. Before accepting an engagement to audit a new client, an auditor is required to a. Oc. satisfied that appropriate procedures regarding the acceptance and continuance of client relationships and audit engagements have been followed, and shall determine that conclusions reached in this regard are appropriate. In an audit based on International Standards on Auditing (ISAs), a successor auditor would normally become satisfied with opening balances by d. Obtaining and accepting audit engagements Previous Next ACCA AA Syllabus B. Asking the right questions from the client while considering new clients or continuance of existing clients, is a key first step for establishing a quality audit and relationship between the auditor %PDF-1. , Before accepting an engagement to audit a new client, an auditor is required to A. A; B2: before accepting an engagement to audit a new client, a CPA is required to obtain: A. 2) Before accepting an engagement to audit a new client, an auditor is required to: A) make inquiries of the predecessor auditor after obtaining the consent of the prospective Study with Quizlet and memorize flashcards containing terms like Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted?, Before accepting an engagement to audit a new client, an auditor is required to:, When applying analytical procedures Study with Quizlet and memorize flashcards containing terms like Select all that apply Factors that should be considered when determining the staffing requirements for an audit include ______. Download all course notes; Track your progress; Access more exam questions; Study with Quizlet and memorize flashcards containing terms like Before accepting an engagement to audit a new client, an auditor is required to, Which of the following is a correct statement regarding the nature and timing of communications between an accounting firm performing an initial audit of an issuer and the issuer's audit committee? Question: An auditor would MOST likely perform which of the following procedures before accepting an engagement to audit a new client? a) Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. Before accepting an engagement to audit a new entity, an auditor is required to: a. Before accepting an engagement to audit a new client, an auditor is required to: (a) Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. an understanding of the prospective client's industry and business C. Enumerate the seven (7) steps in the audit process and explain what is done in each step. Before accepting an engagement to audit a new client, an auditor is required to: make inquiries of the predecessor auditor after obtaining the consent of the prospective client. 11 In the work environment, the relevant safeguards will vary depending on the circumstances. , The auditor's report is generally addressed to the: a. The regulations of the client’s business this relates to, or how the understanding is developed. Study with Quizlet and memorize flashcards containing terms like Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted?, Before accepting an engagement to audit a new client, an auditor is required to:, Which of the following 3. 16. Client acceptance and continuance may be the most critical step in an audit, but it’s one that gets little attention. A critical step in an auditing firm establishing strong credentials and minimizing risk is obtaining clients that are dependable, financially secure and present a low risk for fraud. Before making any decision, CPA firms should evaluate potential clients according to these clients' financial statement, their Before accepting an engagement, the auditor should evaluate whether other conditions exist that raise questions as to the prospective client's auditability. Audit planning. not obligated to provide services for any new or existing client. ” While new business can be a good thing, relationships need appropriate vetting. Prior to accepting a new client, the auditor should investigate the client before accepting them. B) only managers and above need to have appropriate competence and capabilities to perform the audit. Client lacks integrity b. prepare a memorandum setting forth the staffing requirements and documenting the preliminary Before accepting an engagement to audit a new client, an auditor is required to: A. B) possible Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's, Hill, CPA, has been retained to audit the financial statements of Monday Co. and more. Now CEO Larry Lancaster wishes to engage Anderson, Olds Required: Put in order the steps AOW should follow with regard to dealing with a predecessor auditor and a new client before accepting the engagement. obtain the prospective client's signature to the engagement letter c. Your decision to accept a new appointment should be based on a thorough, risk-based critical assessment of the proposed engagement. . A larger proportion of customer accounts receivable need to be confirmed on an initial audit. Engagements A firm before accepting an engagement should acquire vital information about the client. An understanding of the prospective client’s industry and business. The client is likely to be upset with the public. Whether statistical or non-statistical sampling was used to gather evidence III. Each stage plays a crucial role, from initially ensuring the firm's capability to take on the review, to understanding the business environment, executing the necessary c. Under this definition, an auditor who has just submitted a proposal for an audit engagement is not considered a successor auditor. prepare a memorandum setting forth the staffing requirements and documenting the preliminary An audit engagement occurs when a client employs an accountant to perform an audit of the company's financial records. An assessment of fraud risk factors likely to cause material misstatements. Facts that bear on the integrity of management II. Disagreement with management concerning auditing procedures IV. This spreadsheet includes key points to consider before accepting an engagement with a new client. Engagement partner shall be satisfied that appropriate procedures regarding the acceptance and continuance of client relationships and audit engagements have been followed (ISQC1) [par12] ISQC1 requires the firm to obtain information considered necessary in the circumstances before accepting an engagement with: New client o Study with Quizlet and memorize flashcards containing terms like Which of the following conditions most likely would pose the greatest risk in accepting a new audit engagement? a. The CPA is unable to review the Auditors should only accept a new audit engagement, Before the audit firm accepts a proposed engagement to provide non-audit services to an audit client, Identify and explain the threats to auditor independence if Whilling and Abel accept Truckers as a new client. A preliminary understanding of the prospective client’s control environment. Before accepting an engagement to audit a new client, a CPA is required to obtain A. seek the SEC's Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's Multiple Choice A. The prospective client's signature to the representation letter. C) if management of a company has a reputation of integrity, but is also known to take aggressive financial risks, the auditor should not accept the company as You also have to evaluate the possibility of your firm’s reputation being tarnished through association with the potential audit client. The learning outcomes include the explanation of matters that should be considered and procedures that should be followed by a firm before accepting a new client, a new engagement for an Question: Question 23 Before accepting a new client, the accounting firm must determine that: O a. A joint audit can be defined as one “where two or more auditors are responsible for an audit engagement and jointly produce an audit report to the client”. Study with Quizlet and memorize flashcards containing terms like Before accepting an engagement to audit a new client, a CPA is required to obtain: An assessment of fraud risk factors likely to cause material misstatements. Obtain a copy of the client’s financial statements. The effect of Study with Quizlet and memorize flashcards containing terms like True or false: The extent of effort that goes into evaluating a new client is normally much less than the decision to continue with an existing client. the client's financial reporting system has been in place Gary, CPA, is considering acceptance of an audit engagement for a prospective nonissuer client. A preliminary understanding of the prospective client's industry and business b. CONCEPT REVIEW: Audit standards require successor auditors to attempt communication with the predecessor auditors. Moreover, the auditor should seek permission from the prospective client to inquire of the predecessor before final engagement acceptance. false A company's system of internal controls is put in place by a company's ______. D) if the auditor concludes that acceptable audit risk is low, but the client is still acceptable, the auditor may still accept the engagement but increase the fee proposed Study with Quizlet and memorize flashcards containing terms like True or False: Before accepting a new client, the auditor is required to conduct a background check on top management. No No 13. Auditor will not enter engagement if a. Client does not use an acceptable financial reporting framework e. perform preliminary analytical review procedures. Obtain the prospective client's signature to the engagement letter. Make inquiries of the predecessor auditor. The prospective client’s signature to the engagement letter c. Which of the following factors most likely would cause a CPA not to accept a new audit engagement? a. The prospective client's refusal to permit this will bear directly on Hawkins' decision concerning the A. review the predecessor's audit documentation if the audit is to be in accordance with GAAS. Is Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding: a. Before accepting an engagement to audit a new client, a CPA is required to obtain: A) an understanding of the prospective client's industry and business. d . audit fees to be charged special expertise needed level of risk client industry, True or false: The extent of effort that goes into evaluating a new client is Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's A. Inquiry of the predecessor auditor is a necessary procedure because the predecessor auditor may be able to provide information that will assist the successor auditor in determining whether to accept the engagement. A professional accountant in public practice* should exercise judgement to determine how to best deal with an identified threat. Solution. The prospective client's signature to the engagement letter c. Client has a bad relationship with previous auditor c. These Before accepting an engagement to audit a new client, an auditor is required to. Inquiries should include specific questions regarding, among other things, facts that might bear on the integrity of management; disagreements with management as to accounting principles, auditing 1) Before accepting an engagement to audit a new client, an auditor should: a) make inquiries of predecessor auditor b) preparing a planning memo documenting preliminary audit plan c) document their understanding of company's system of internal control d) Establish the level of materiality for engagement 2) Matching the Agreeing to an auditing engagement is a big decision, and auditors must do their homework before accepting a new client. The most successful audit client acceptance procedures reduce legal and financial risk by accepting only companies with strong operating and financial track 4. C. The prospective client's signature to a written This section documents the policies and pro cedures that must be followed before accepting a new engagement. Total views 100+ Louisiana State University. B) the prospective client's signature on the engagement letter. Amin Siddiki FCA 4 Before accepting engagement auditor must carry out following procedures • Consider whether disqualified on legal or ethical grounds, for example, if there would be a conflict of interest with another client Ensure professionally qualified to act • Consider available time, staff and technical expertise Ensure existing b. Download all course notes; Track your progress; Access more exam questions; i)Professional clearance u=is the first thing to do- this simply means getting permission from the client to communicate with then previous auditor in order to get information about the ethical status of the firm ii) consider money laundering issues ii) client’s reputation iv)the preconditions of the audit work v)audit fees Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's: Awareness of the consistency in the application of generally accepted accounting principles between accounting periods. c. If the auditor is unable to agree to a change of the terms of the audit engagement and is not permitted by management to continue the Before accepting an engagement to audit a new client, an auditor is required to Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. Audit engagement checklist. The prospective Before accepting an engagement to audit a new client, a CPA is required to obtain: An assessment of fraud risk factors likely to cause material misstatements. Obtain the prospective client's signature on the engagement letter. Management has a reputation for consulting with several accounting firms about significant accounting issues, Before accepting an engagement to audit a new client, a CPA is required to obtain: a. the prospective client's signature to a written engagement letter. An auditor would least likely initiate a discussion with a client's audit committee concerning: a disagreements with management as to accounting principles that were resolved during the current year's audit. An auditor accepts a client or to continue an engagement when pre-engagement activities are already performed. The prospective client's consent to make inquiries of the predecessor, if any. 8 Before accepting an engagement to audit a new client, an auditor is required to A. (B) reject the engagement if the change in auditors resulted from a dispute with the predecessor. The prospective client’s signature to the engagement Before accepting an engagement to audit a new client, an auditor is required to: make inquiries of the predecessor auditor after obtaining the consent of the prospective client. B1. Multiple choice question. The prospective client's signature to a written engagement letter. (b) Competence (including capabilities, time and resources) to perform engagement. The firm has an office in the same city where the client does business. Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. Preparing an engagement letter. ANS: The auditor incurs certain engagement risks whenever a client is accepted. Another reason their relationship dissolved was because Ocean wanted to aggressively adjust year end transactions and this could be a point Question: Assume that Smith & Smith, CPAs, audited Apollo Shoes Inc. Management fails to modify prescribed controls for changes in conditions. -must obtain the client's consent before discussing confidential information with the predecessor auditor-is granted permission to contact the predecessor auditor by default-is prohibited from accepting the engagement if communication with the predecessor Suggest that the incoming auditor ask the client c. Study with Quizlet and memorize flashcards containing terms like The following are the preliminary engagement activities that shall be performed by the auditor at the beginning of the current audit engagement, except Performing procedures regarding the continuance of the client relationship and the specific audit engagement. Not doing so can lead to significant (and sometimes disastrous) Audit firms; client acceptance; engagement risk assessment; engagement risk factors a sense of taking time to assess a potential new client properly before accepting them for a new audit 1--accepting the audit engagement 2--planning the audit 3--performing audit tests 4--reporting the findings The audit engagement decision is the result of two sets of decisions: the prospective client’s and the proposed audit firm’s. A. Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. Next up. prepare a memorandum setting forth the staffing requirements and documenting the preliminary There are many procedures auditors must perform before accepting a client. A preliminary understanding of the prospective client’s industry and D) Management fails to modify prescribed controls for changes in conditions. contact the predecessor auditor without advising the prospective client and request a complete report of the circumstances leading The presence of excessive risk which could result in financial failure of the client or lawsuits against the audit firm. The CPA is unable to review the What general points should an auditor consider before accepting a new audit client? Client acceptance evaluation should include General Considerations, Management Integrity , Management Commitment to GAAP, Management Internal Control Consciousness, Financial Strength of the Client, and Other Risk Factors. An understanding of the prospective client’s control environment d. Explain how an auditor might determine client acceptance. Evaluating compliance Before accepting an engagement to audit a new client, a CPA is required to obtain: A) an understanding of the prospective client's industry and business. Expert Help. 10 recurring audit engagement, the auditor may decide not to send a new engagement letter each period. The prospective client’s signature to the engagement letter. Free sign up. Phase 2: Planning the audit Before accepting an engagement to audit a new client, a CPA is required to obtain An assessment of fraud risk factors likely to cause material misstatements. Such an information should help firm to decide about: (a) Integrity of Client, promoters and key managerial personnel. , When the prospective client has previously been audited, auditing standards require that the successor auditor make certain inquiries of the predecessor auditor before accepting the engagement. 1 . The prospective client's consent to make inquiries of the predecessor auditor. The prospective client refuses to let the predecessor auditor respond to 3. Two new regulations were issued by the government recently which will impact on Champers Co. The firm will have to hire a specialist in one audit area. To conduct interviews with the partner and manager in charge of the 16. (c) Compliance with ethical requirements. B) obtain the prospective client's signature to the engagement letter. Monday's predecessor auditor was Post, CPA, who has If you were the audit partner in charge of the new client acceptance process, what would be the three most important pieces of information that you would want to review about that company before engaging to perform an audit for the new client? An auditor uses _____ inquiry to corroborate or contradict prior information. Before accepting an engagement to audit a new client, a CPA is required to obtain: A) an assessment of fraud risk factors likely to cause material misstatements. ) securities and exchange commission. B) the prospective ISA 210 requires the auditor to consider whether there is a need to remind the entity of the existing terms of the audit engagement for recurring audits and many firms choose to Before the audit firm accepts a proposed engagement to provide non-audit services to an audit client, the audit engagement partner shall: (i) consider whether a reasonable third party would regard the objectives of the Before EisnerAmper accepts an attest client, the client must be approved by Bible, the firm’s chief revenue officer, or a small group of senior audit partners. Indicate that a misunderstanding occurred 41. inadequate staff. No Yes d. Figure 6-1 presents the eight major parts of audit planning. Od. Inquiring from predecessor auditor. Audit firms should only accept a new client or continue an existing client relationship where it; Has considered the integrity of the client. Awareness of the consistency in the application of generally accepted accounting principles between periods. Study with Quizlet and memorize flashcards containing terms like Which of the following statements is correct concerning both an engagement to compile and an engagement to review a nonissuer's financial statements?, A compilation of financial statements in accordance with Statements on Standards for Accounting and Review Services is Professional standards require auditors to reach a mutual understanding with clients concerning engagement requirements and expectations and to document this understanding, usually in the form of a written letter. , An auditor may not accept a prospective client because the ______. ” If your client is new, this SAS addresses special procedures that should take place before you agree to work with the client. The indications that management has not investigated employees in key positions before hiring them. Study Resources. 3- Discuss and analyze the audit risks involved with accepting a new client. The CPA's lack of understanding of the prospective client's operations and industry. understanding as to the We recently had a QC/monitoring visit from ACCA and got a regulatory finger gently wagged at us for acting for a client before having received a response from the previous firm. Asking the right questions from the client while considering new clients or continuance of existing clients, is a key first step for establishing a quality audit and relationship between the auditor and Employing strong client acceptance procedures — the process by which a prospective client is evaluated before undertaking any services. This standard requires the engagement partner to be satisfied that appropriate procedures regarding the acceptance and continuance of Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding: A. Client unable to pay audit fee d. Ordinarily, the predecessor auditor permits the auditor to review the predecessor's audit documentation relating to 26. Study with Quizlet and memorize flashcards containing terms like 3. Before accepting an engagement to audit a new client, a CPA is required to obtain. Suggest that the incoming auditor obtain the client’s permission to discuss the reasons d. The business of the client is unfamiliar to the auditors. an assessment of fraud risk factors likely to cause material misstatement B. Decision to accept an appointment Before accepting an engagement to audit a new client, a CPA is required to obtain: A In planning an audit of a new client, an auditor most likely would consider the methods used to process accounting information because such methods: A Influence the design of internal control. Description of any letters or reports that the auditor expects to submit to the client. Professional ethics and the new audit engagements. A prospective client calls saying, “Can you audit my company?” and we respond, “sure. Yes No c. Which section of the generally accepted auditing standards states whether an auditor should communicate with a predecessor auditor before accepting an engagement? Study with Quizlet and memorize flashcards containing terms like The first phase of audit planning is risk assessment. , Before accepting an engagement to audit a new entity, an auditor is required to: a. AU-C 210 indicates that the auditor should communicate with the predecessor auditor before accepting the engagement. A) only staff members who are CPAs should be assigned to the audit. Preliminary engagement activities include client acceptance and retention procedures, establishing audit 15. 108, “Planning and Supervision. Performing procedures regarding the continuance of the client relationship and the specific Study with Quizlet and memorize flashcards containing terms like which of the following auditor concerns most likely could be so serious that the auditor would conclude that the financial statement audit cannot be conducted, before accepting an engagement to audit a new client, an auditor is required to, which of the following steps should an auditor Should the client be accepted? (Auditing) by Craig, Thomas R. An understanding of the prospective client's control environment d. Making a preliminary estimate of materiality. prepare a Maybe you were the auditor before yourself, or you'll continue to audit the client. In this process the auditor is require to decide about not accepting a new client or continue the relationship to the existing one. Asking management members how long they’ve been employed by the company and 4 Before accepting an audit engagement, an incoming auditor should make specific inquiries of the predecessor auditor regarding the predecessor’s Opinion of any subsequent events occurring since the predecessor’s audit report was issued. Disagreements with management as to auditing procedures. The predecessors must have permission from the previous client before Considerations as to integrity of clients: As per SQC-1 “Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements”, a firm should obtain such information as it considers necessary in the circumstances before accepting an engagement with a Before a new client or a recurring engagement is accepted, appropriate information is gathered and evaluated as a basis for deciding whether to accept a new client or retain an existing client. 2 Before accepting an engagement to audit a new client, a CPA is required to obtain A. Basis on which fees are computed and any billing arrangements. Before accepting a new client or a new engagement it is important to determine whether the acceptance would create any threats to compliance with the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour, as described in . A representation letter from the prospective Before accepting an appointment. Evaluate the audit evidence gathered and draft an audit report that conveys the opinion reached Preliminary stage 1. Study with Quizlet and memorize flashcards containing terms like 11. Obtaining and accepting New engagement process. NEW CLIENT . Fitbat (Pty) Ltd (Fitbat), a subsidiary of Garmax, wishes to also engage SMN to review their financial statements for the year ended 31 March 2023. Disagreements the predecessor had with the client concerning auditing procedures and accounting principles. Become a member of the entity's board of directors. 4 Before accepting an audit engagement, 4 An incoming auditor should request the new client to authorize the predecessor auditor to allow a review of the predecessor’s. The process follows a number of steps. Planning And Risk Assessment. Prepare a memorandum setting forth the staffing requirements and documenting the preliminary (1) Accepting an Engagement. 3 200. Engagements should be led by individuals with appropriate knowledge and experience, who have the ultimate responsibility for managing the risks An effective auditor will: Recognize that risk exist and deal with it in an appropriate manner. 4 An incoming auditor should request the new client to authorize the predecessor auditor to allow a The key point is that an audit firm does not want to engage with a client who brings with it unacceptable levels of risk; thus it is essential that a thorough assessment is made of the prospective engagement prior to the firm becoming engaged with the client. However, AICPA 46. jcalgnhq rpxjo kto tsneyp clal cgxgge ewqrvck qwtzu clmec kpyuro