Unit 2 Summary.docx - Unit 2 Summary Auditing standards and quality control Audit process Prior to the audit o Assessing ethical requirements of client

Unit 2 Summary.docx - Unit 2 Summary Auditing standards and...

This preview shows page 1 - 3 out of 13 pages.

Unit 2 Summary, Auditing standards and quality control Audit process Prior to the audit o Assessing ethical requirements of client and engagement including integrity of the client and agreeing to the terms of any engagement Planning the audit o Gaining understanding of the client and its environment, assessing risks and determining materiality, this helps develop the overall audit plan Responding to assessed risks – undertaking the audit o Performing the audit field work or evidence gathering process o Gathering enough evidence to form auditor’s opinion o May include controls testing, and will include performing substantive tests, such as verifying dollar amounts o Evidence gathered then evaluated to determine sufficiency and appropriateness of the basis of going concern, e.g. this event can lead to a going concern issue Finalising the audit o Formulation of the auditor’s opinion and reporting activities Continuous audit activities and related Standards Activity Related Standards and requirements Consider engagement independence and ethical considerations ISQC 1 1 Requires an audit firm to establish policies and procedures that will help ensure it only undertakes or continues engagements and relationships in which the firm and its personnel comply with relevant ethical requirements (ISQC 1 para. 20). Complying with ethical requirements is a continual obligation throughout the engagement ISA 220 1 Requires the engagement partner to ‘remain alert’ throughout the engagement ‘for evidence of non- compliance with relevant ethical requirements by members of the engagement team’ (ISA 220 para. 9) Direction and supervision of the audit ISQC 1 1 Requires appropriate quality control policies and procedures to help ensure engagements are performed in accordance with IAASB Standards, ethical requirements and applicable legal and regulatory requirements (ISQC 1 para. 11) ISA 220 1 Requires the engagement partner to take responsibility for the ‘direction, supervision and performance’ of the audit (ISA 220 para. 15(a)) Assess continuing relationship with client ISA 220 1 Requires the engagement partner to reconsider the client relationship if the firm obtains any information that would have caused it to decline the engagement had that information been available earlier (ISA 220 para. 13)
Image of page 1
Communicate with management and those charged with governance Consult with appropriate persons on difficult or contentious matters Document work performed, findings and conclusions in appropriate work papers ISA 260 Communication with Those Charged with Governance (ISA 260). Requires the auditor to communicate specific matters to those charged with governance (ISA 260 para. 3). Additional matters to be communicated which complement these requirements are identified in other Auditing Standards, such as: ISA 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management (ISA 265) 1 Requires the auditor to ‘communicate in writing
Image of page 2
Image of page 3

You've reached the end of your free preview.

Want to read all 13 pages?

  • Winter '16

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture