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This document discusses the key considerations and procedures for auditors to follow when obtaining an audit engagement, including:
1) Matters to consider before accepting an engagement such as communicating with the present auditors, obtaining client permission, and ensuring sufficient resources.
2) Appointment considerations as per ethics codes such as ensuring no independence issues and that the appointment was made properly.
3) Procedures for determining low vs high risk clients based on factors like financial performance, controls, management, and transactions.
4) Sources of information about new clients, procedures after accepting nomination, the objectives of an engagement letter, typical contents of audit engagement letters, and when a new letter may be needed.
Исходное описание:
Chapter- 02, Process of Assurance- Obtaining an Engagement
Оригинальное название
Chapter- 02, Process of Assurance- Obtaining an Engagement
This document discusses the key considerations and procedures for auditors to follow when obtaining an audit engagement, including:
1) Matters to consider before accepting an engagement such as communicating with the present auditors, obtaining client permission, and ensuring sufficient resources.
2) Appointment considerations as per ethics codes such as ensuring no independence issues and that the appointment was made properly.
3) Procedures for determining low vs high risk clients based on factors like financial performance, controls, management, and transactions.
4) Sources of information about new clients, procedures after accepting nomination, the objectives of an engagement letter, typical contents of audit engagement letters, and when a new letter may be needed.
This document discusses the key considerations and procedures for auditors to follow when obtaining an audit engagement, including:
1) Matters to consider before accepting an engagement such as communicating with the present auditors, obtaining client permission, and ensuring sufficient resources.
2) Appointment considerations as per ethics codes such as ensuring no independence issues and that the appointment was made properly.
3) Procedures for determining low vs high risk clients based on factors like financial performance, controls, management, and transactions.
4) Sources of information about new clients, procedures after accepting nomination, the objectives of an engagement letter, typical contents of audit engagement letters, and when a new letter may be needed.
Process of Assurance: Obtaining an Engagement (Chapter- !" #$ %hat matters to be considered before accepting an engagement& (i) The present and proposed auditors should normally communicate about the client prior to the audit being accepted; (ii) The client must be asked to give permission for communication to occur; and (iii) The auditors must ensure that they have sufficient resources to carry out the appointment. !$ %hat is the appointment consideration for engagement as per Schedule C of 'CA( Code of Ethics as well as ')AC Code of Ethics& As per Schedule C of ICA Code of !thics as "ell as I#AC Code of !thics$ before accepting a ne" audit client$ the auditors must ensure that there is no independence or other ethical issues likely to cause significant problems "ith the ethical code. #urthermore$ ne" auditors should ensure that they have been appointed in a proper and legal manner. The nominee auditors must carry out the follo"ing procedures% (i) !nsure professionally &ualified to act; (ii) !nsure e'isting resources are ade&uate; (iii) (btain references; and (iv) Communicate "ith present auditors. *$ +ow will ,ou determine the low ris- and high ris- clients& .ow ris- clients a. )ood long term prospects b. *ell+financed c. Strong internal controls d. Conservative prudent e. Accounting policies f. Competent$ honest management g. #e" unusual transactions. +igh ris- clients a.,oor recent forecast performance b. -ikely to have lack of finance c. Significance control$ "eaknesses d. .oubtful accounting policies e.-ack of finance director f. Significant une'plained transaction or transaction "ith connected companies. Assurance Professional Stage Knowledge level Process of Assurance: Obtaining an Engagement Page 1 /$ %hat ma, be the sources of information about new client& The follo"ings are the sources of information about ne" client% En0uiries of other source+ These may be ankers and Solicitors; 1eview of documents+ /ost recent annual accounts$ listing particulars$ credit rating; Previous accountants and auditors+ ,revious auditors should be invited to disclose fully call relevant information; and 1eview of rules and standards+ Consider specific la"s and standards that relate to industry. 2$ %hat procedures should be carried out after accepting nomination& The follo"ing procedures should be carried out after accepting the nomination% !nsure that the outgoing auditors removed or resignation has been properly conducted in accordance "ith national legislation; !nsure that the auditor0s appointment is valid; and Set up and submit a letter of engagement to the client. 3$ %hat is an engagement letter& %hat are the ob4ectives of it& Engagement letter An engagement letter documents and confirms the auditor0s acceptance of the appointment$ the ob1ective and scope of the audit$ the e'tent of the auditor0s responsibilities to the client$ and the form of any report. 5he ob4ective of an engagement letter is to: .efine clearly the e'tent of the firm0s responsibilities and so minimi2e the possibility of any misunderstanding bet"een the client and the firm; ,rovide "ritten confirmation of the firm0s acceptance of the appointment the scope of the engagement and the form of their report. 6$ %hat are the form and remaining content of audit engagement letter& The form and content of audit engagement letter may very for each client but they "ould generally include the follo"ings% The ob1ective of the audit; /anagement0s responsibility; The scope of the audit; The form of any report; 3nrestricted access to "hatever records and documents; and Assurance Professional Stage Knowledge level Process of Assurance: Obtaining an Engagement Page 2 Inherent limitation and unavoidable risk that may remain undiscovered The auditor may also "ish to include the follo"ings% ,lanning of the audit; *ritten confirmation of management representations; Ackno"ledge receipt of the engagement letter; Any other reports that the auditor e'pects to issue; asic of computing fees; and A reference to any further agreements bet"een the auditor and the client. 7$ %hen should it be appropriate to send a new letter& (n recurring audits$ the auditor should consider "hether the terms of the engagement to be revised or need to remind the client of the e'iting terms of engagement. The auditor may not re&uire to send a ne" engagement letter each period. 4o"ever$ the follo"ing may make it appropriate to send a ne" letter% Any misunderstanding I respect of ob1ective and scope; Any revise or special terms; Change of senior management; Any change in nature or si2e of the client0s business; and -egal re&uirement. 8$ 9raft an engagement letter$ 5o the (oard of directors or the appropriate representative of senior management 5ou have re&uested that "e audit the financial statement of AC Co. -td. *hich companies the balance sheet as at dd6mm6yy$ and the profit and loss account$ statement for the year then ended. *e are pleased to confirm our acceptance and our understanding of this engagement by means of this letter. (ur audit "ill be made the ob1ective of our e'pressing an opinion of the financial statement. 1esponsibilities of directors and auditors As directors of AC Co. -td. you are responsible for ensuring that the company maintains proper accounting records and for preparing financial statement "hich give a true and fair vie" and have been prepared in accordance "ith the companies Act. 7889. 5ou are also responsible for making available to us all records. Assurance Professional Stage Knowledge level Process of Assurance: Obtaining an Engagement Page 3 *e have a statutory responsibility to report to the members "hether in our opinion the financial statements give a true and fair vie"$ "hether they have been properly prepared in accordance "ith the Companies Act. 7889. Scope of audit (ur audit "ill be conducted in accordance "ith the angladesh Standard on Auditing and "ill include such test of transactions and of the e'istence$ o"nership and valuation of assets and liability for as "e consider necessary. The responsibility for safeguarding the as sets of the company and for the prevention and detection of guard and error and noncompliance "ith la" or regulations rests "ith yourselves This letter "ill be effective for future years unless it is terminated amended or superseded. ,lease sign and return the attached copy of this letter to indicate that it is in accordance "ith your understanding of this arrangement for our audit of the financial statements$
:;< Co$ Ackno"ledge on behalf of A(C Co$ .td$ b, (Sign) :ame$ Title ; .ate 5he End
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