Advanced Audit and Assurance PDF

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Advanced Audit and Assurance CH 3, Practice Management Quality Control: Reputational risk of both firm and profession caused by negligence, therefore QC is very important. QC procedures are the internal controls implemented by firms

QC of each assignment: Measures should be taken on each assignment  Pre appointment checks on clients (knowledge of business, resources and experience)  All work should be suitably (directed, supervised and reviewed)  Suitable consultation with others when unclear.  A hot review  Planning and documentation  Be careful

Advertising, Fees and tendering Advertising: Clarity, Accuracy, no unsubstantiated claims, no adverse comment about fellow professionals, General professionalism, Use ACCA/CPA logo Setting audit fees: Contingency fees: Lowballing: Tendering: Changing auditors: Auditor decides: Company decides: Client acceptance procedures: Before accepting a client there are various checks and activities must be undertaken. 1. Pre conditions of an audit 2. Engagement letter 3. Ethical checks 4. Client screening Engagement letter:

Materiality: Materiality guidelines: Quantitative,  Something that is important due to its size. ½-1% of revenue, 1-2% of total asset, 5-10% of PBT Qualitative,  Something that is important due to its nature. E.g.: Directors pay, related party transactions. Other issues with materiality Other issues with audit planning Initial audits (also known as initial engagement) Effective audit planning Matters not relevant to audit planning

AAA Sept 2018 Q3 b Points to consider, Jansen and Co are auditing Watson Co. Interim audit manager has appointed as a result of manager’s illness. Audit supervisor is part qualified CCA. Previous audit manager was not actively involved. In doubt, follow previous year’s working papers. SAR? Is it justified?

AAA Day 3 CH 5 Audit Evidence ISA 500 collection method  Inspection of assets  Inspection of documents  Observation  External confirmation  Recalculation  Reperformance  Analytical procedures  Inquiry

As your sales increases it will increase your risk of increasing variable costs You get 30m dollar in loan and pay back 34m dollar Higher risk that properly not presented in the financial statements

CH 6 Audit Matters and Evidence for specific Accounting areas IAS 1: Presentation of Financial Statements Discusses basic accounting concepts, such as going concern, accrual concept, Going concern accounting rules Typically, companies prepare financial statements under going concern concept. If the Audit work Work on GC is explained in ISA 570...