What factors would you consider before accepting the audit engagement?

What factors should an auditor consider before accepting a company as an audit client?

Discuss the factors an auditor should consider before accepting a company as an audit client. Answer: The auditor should investigate and consider the prospective client’s standing in the business community, financial stability, management’s integrity, and relations with its bankers, attorneys, and previous CPA firm.

Which is the 4 steps in accepting an audit engagement?

Each audit engagement is unique, but most share the basic steps of preparation, planning, field testing, and audit procedures, as well as subsequently rendering the audit opinion.

What factors should be taken into consideration to ensure the set up of a viable audit department?

5 Key Factors to Enhance Audit Committee Effectiveness

  • Audit committee transparency. …
  • Effective communication. …
  • Committee composition – including appropriate skills, competencies and expertise. …
  • How it gets its work done – efficient and effective ways of working. …
  • Strength of the finance function.
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What factors should be considered while preparing an audit plan?

Audit Plan

  • The planned nature, timing, and extent of the risk assessment procedures; …
  • The planned nature, timing, and extent of tests of controls and substantive procedures;12 and.
  • Other planned audit procedures required to be performed so that the engagement complies with PCAOB standards.

Why an auditor might not accept an audit engagement?

Audit engagement should not be accepted under following circumstances: Serious limitations on scope. Financial reporting framework is unacceptable. Management refuses to provide agreement that it acknowledges its responsibility as regards financial statements.

What should an auditor consider in developing the audit objectives of a particular engagement?

To plan the engagement effectively, internal auditors should start by understanding the context and purpose of the engagement, why it was included in the annual internal audit plan, and how the organization’s mission, vision, strategic objectives, and other elements align with those of the area or process under review.

What are the major factors that should be considered before accepting the 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.

How do you accept an audit engagement?

carry out checks to ensure the firm can be independent, is competent to do this audit and has the necessary resources. assess whether this work is suitably low risk. assess the integrity of the company’s directors.

How do you prepare for an audit engagement?

Preparing for an Audit Engagement?

  1. Plan ahead. …
  2. Ensure ease of access of accounting records. …
  3. Prepare internal financial analysis. …
  4. Seek assistance for complex accounting. …
  5. Review prior year adjusting entries. …
  6. Ensure books are kept accurate throughout the year. …
  7. Self-review for quality control. …
  8. Communicate with auditors.
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What are the consideration to be kept in mind before taking up a new audit?

1. Making a list of books used, making a list of employees and their duties. 2. Testing the final accounts, trial balance, ledgers, etc.

Why does the auditor make a plan before starting an audit?

Audit planning is a vital area of the audit primarily conducted at the beginning of audit process to ensure that appropriate attention is devoted to important areas, potential problems are promptly identified, work is completed expeditiously and work is properly coordinated.