AT-5905_GAAS and quality controls

AT-5905_GAAS and quality controls - Page 1 of 7 CPA REVIEW...

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Page 1 of 7 CPA REVIEW SCHOOL OF THE PHILIPPINES M a n i l a AUDITING THEORY QUALITY CONTROLS AND GENERALLY ACCEPTED AUDITING STANDARDS (GAAS) Related PSA : PSA 220 QUALITY CONTROL FOR AUDIT WORK Audit Firm Level : The audit firm should implement quality control policies and procedures designed to ensure that all audits are conducted in accordance with PSAs or relevant national standards or practices. 1. Pro fessional requirements: independence, integrity, objectivity, confidentiality and professional behavior. 2. S kills and competence: The firm is to be staffed by personnel who have attained and maintained the technical standards and professional competence required to enable them to fulfill their responsibilities with due care. 3. A ssignment: Audit work is to be assigned to personnel who have the degree of technical training and proficiency required in the circumstances. 4. D elegation: There is to be sufficient direction, supervision and review of work at all levels to provide reasonable assurance that the work performed meets appropriate standards of quality. 5. C onsultation: Whenever necessary, consultation within or outside the firm is to occur with those who have appropriate expertise. 6. A cceptance and retention of clients: An evaluation of prospective clients and a review, on an ongoing basis, of existing clients is to be conducted. In making a decision to accept or retain a client, the firm’s independence and ability to serve the client properly and the integrity of the client’s management are to be considered. 7. M onitoring: The continued adequacy and operational effectiveness of quality control policies and procedures is to be monitored. Individual Audit Level : The auditor should implement those quality control procedures which are, in the context of the policies and procedures of the firm, appropriate to the individual audit. 1. D irection: Direction involves informing assistants of their responsibilities and the objectives of the procedures they are to perform. It also involves informing them of matters, such as the nature of the entity’s business and possible accounting or auditing problems that may affect the nature, timing and extent of audit procedures with which they are involved. 2. S upervision: Supervision is closely related to both direction and review and may involve elements of both. Personnel carrying out supervisory responsibilities perform the following functions during the audit: a. monitor the progress of the audit to consider whether (1) assistants have the necessary skills and competence to carry out their assigned tasks; (2) assistants understand the audit directions; and (3) the work is being carried out in accordance with the overall audit plan and the audit program. b.
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AT-5905_GAAS and quality controls - Page 1 of 7 CPA REVIEW...

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