To Take Into Account 2
To Take Into Account 2
cases.
QUESTIONS
5.1 Another area of concern is whether to apply client acceptance procedures for audit
clients only or for clients seeking tax or management consulting assistance. Some CPAs
use client acceptance procedures for audit clients only, whereas others conduct a review
for all new clients using any service the CPA offers.
5.2 Auditors get their information about an audit client from three basic sources: their
experience with the client, publicly available information, and from the client themselves.
The source of the auditors’ experience with the client would prove the best for new
businesses. If the client is new, the auditor should consult prior auditors and increase the
preliminary information search. The method is to review documentation and discuss with
client lawyer, banker, and prior audit manager. Before accepting a new client an audit firm
will do a thorough investigation to determine if the client is acceptable and if the auditor
can meet the ethical requirements of independence, specific competence, etc. Sources of
information outside those mentioned for both new and existing clients include interviews
with local lawyers, other CPAs, banks and other businesses, although many of them may
5.3 Many auditing firms evaluate existing clients every year. In addition to the research
Discussed above, the auditor will consider any previous conflicts over scope of the audit,
Type of opinion and fees, pending litigation between the audit firm and client, and
Management integrity. These four factors strongly influence
Whether the relationship will continue. For continuing engagements, the auditor would
Update and re-evaluate information gathered from the prior years’ working papers. The
Auditor should also perform procedures designed to identify significant changes that have
Taken place since the last audit.
The auditor may also choose not to continue conducting audits for a client because he
Feels excessive risk is involved. For example, there may be regulatory conflict between a
Governmental agency and a client which could result in financial failure of the client and
Perhaps ultimately lawsuits against the auditor. It may be that the auditor feels that the
Industry (such as financial services) offers more risk than is acceptable to the specific
Auditor
5.4 he group auditor must form their own concurring opinion on any judgmental areas.
This does not require having the same depth of knowledge as the expert/other auditor, but
they would need to be able to review the third party’s files and have sufficient independent
knowledge to understand the work done, the reason for the work and the conclusions from
that evidence.
Sufficient appropriate audit evidence, the auditor shall determine whether to use
The work of an auditor’s expert. Evaluating the Adequacy of the Auditor’s Expert’s Work
12. The auditor shall evaluate the adequacy of the auditor’s expert’s work for the
(c) If that expert’s work involves the use of source data that is significant to
Source data.
5.6 The auditor will not communicate an issue in the “Key audit issues” section of his
report
Compliance with ISA 705. In extremely rare circumstances, the auditor determines that
You should communicate in the audit report because you can reasonably expect that
Adverse consequences of doing so would outweigh the benefits in the public interest that
said
Communication would have. This will not apply if the entity has publicly disclosed
information about
The question.
What would F.A. Bloch and Co. consider in determining whether to accept
these clients?
Equipo de Auditoría.
Presupuesto.
Lo que tirne n en comun las dos propuestas es que los dos clientes deben
ser investigados como rige la norma y siguiendo los parámetros
establecidos, lo que tiene de diferentes es que cada uno es de un modo
diferente
Describe what is discussed in each section of the proposal to Autodafe.
CASE
5.20 Description of the Business. Compu Group Corporation designs,
develops, manufactures, and markets a wide range of personal
computing products, including desktop personal computers,
portable computers, network servers, and peripheral products
that store and manage data in network environments. The
company markets its products primarily to business, home,
government, and education customers. The company operates in
one principal industry segment across geographically diverse
markets.
The company is subject to legal proceedings and claims which
arise in the ordinary course of its business. Management does
not believe that the outcome of any of those matters will have a
material adverse effect on the company’s consolidated financial
position or operating results.
Required:
Based on the information presented evaluate the company for acceptance.
List criteria that must be reviewed in order to determine acceptability.
Make a checklist for areas covered.
Outline your audit approach.
(Adopted from idea by Phoong Ngo, Qiang Hsing, and Chi-hui Lee)