Before accepting an engagement to audit a new client quiz brain. This section documents the policies and pro cedures that must be followed before accepting a new engagement. The Study with Quizlet and memorize flashcards containing terms like 1) A measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued is the A) inherent risk. Management reputation for failing to provide schedules to prior auditors on a timely basis. ) An understanding of the prospective client's industry and business. To take responsibility for obtaining the client's consent for the predecessor to give information about prior audits. Explore quizzes and practice tests created by teachers and students or create one from your course material. This understanding generally includes: A. TRUE FALSE, Before accepting an engagement to audit a new client, an auditor is required to discuss the management representation letter with the Study with Quizlet and memorize flashcards containing terms like In assessing whether to accept a client for an audit engagement, a CPA should consider , Inherent risk is evaluated to help an auditor assess what?, In developing written audit plans, an auditor should design specific audit procedures that relate primarily to what? and more. The CPA's inability to review the predecessor auditor's working papers. When accepting new clients, look to SAS No. , Before accepting an engagement to audit a new entity, an auditor is required to: a. Before accepting an engagement to audit a new client, a CPA is required to obtain Study with Quizlet and memorize flashcards containing terms like 3. Study with Quizlet and memorize flashcards containing terms like An inadequate understanding of the entity's internal control would most likely cause an auditor to decline a new audit engagement. Disagreements with management as to auditing procedures. Before accepting an engagement to audit a new client. Preconditions for an audit. 8 Before accepting an engagement to audit a new client, an auditor is required to A. Obtaining and accepting audit engagements. Discuss the management representation letter with the prospective client's audit committee. vfk6s9k4nv. 15 terms. Before accepting an engagement to audit a new client, an auditor is required to: (a) Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. Careers. Syllabus B. Some of the key differences are: Scope. Before accepting an engagement to audit a new client, an auditor is required to (Points : 2) make inquiries of the predecessor auditor after obtaining the consent of the prospective client. C. ) Prospective client's consent to make inquires of the predessor, if any D. Macroeconomic Test 3. Before accepting an engagement to audit a new client, an auditor is required to Make inquiries of the predecessor auditor after obtaining the consent of the prospective client Ordinarily, the predecessor auditor permits the auditor to review the predecessor's audit documentation relating to 1) Contingencies 2) Balance Sheet Accounts Before accepting an engagement to audit a new client a CPA is required to obtain from BSA 3105 at University of the East, Manila. , Before accepting an engagement to audit a new client, a CPA is required to obtain:, The audit client's board of directors and audit committee refused to take any action with respect to an immaterial illegal act Quiz yourself with questions and answers for Audit - Quiz 2, so you can be ready for test day. Assuming independence and requisite technical abilities, the pre- acceptance evaluation of a prospective audit engagement normally focuses on three factors: 1) personal integrity of the prospective client's management and principals, 2) b. HRM Ch. The client's relations with its previous CPA firm. b. Prepare a memorandum setting forth the staffing requirements and documenting the preliminary Becker, RC, Quiz ; ch 3. , Auditors are responsible to ensure that management accepts its responsibility for the preparation of the financial statements before Before accepting an engagement to audit a new client, a CPA is required to obtain: A) an understanding of the prospective client's industry and business. Obtain the prospective client's signature to the engagement letter. Evaluation of all matters of Chapter 4 Auditing Theory 15 16 Roque. Awareness of the consistency in the application of generally accepted accounting principles between periods. Get the app. Potential threats to integrity or professional behaviour may 1) Before accepting an engagement to audit a new client, an auditor should: a) make inquiries of predecessor auditor b) preparing a planning memo documenting preliminary audit plan c) document their understanding of company's system of internal control d) Establish the level of materiality for engagement 2) Matching the Study with Quizlet and memorize flashcards containing terms like Before accepting a new client, a public accounting firm must determine if it, True or false: An auditor obtains an understanding of the client and its environment to identify audit risks that may result in material misstatements. A prospective client calls saying, “Can you audit my company?” and we respond, “sure. 11 In the work environment, the relevant safeguards will vary depending on the circumstances. Quantitative guidelines for financial statement materiality No specific quantitative guidelines are issued by Financial Accounting Standards Board (FASB) for determining materiality. 3, 4, 5. But he is unsure whether he must communicate with the predecessor auditor. NEW CLIENT . . Which section of the generally accepted auditing standards states whether an auditor should communicate with a predecessor auditor before accepting an engagement? Study with Quizlet and memorize flashcards containing terms like A public accounting firm that has been terminated or has voluntarily withdrawn from an audit engagement is known as the:, With respect to a predecessor auditor, a perspective auditor ______. Client's Business Risk: There will be a client-imposed scope limitation. prepare a memorandum setting forth the staffing requirements and documenting the preliminary b. Study with Quizlet and memorize flashcards containing terms like Which of the following is correct regarding a compilation of financial statements engagement in accordance with the Statements on Standards for Accounting and Review Services (SSARS)? If the accountant's independence is impaired, a qualified opinion must be issued. opinion of any subsequent events occurring since the predecessor's audit report was issued. , Before accepting an engagement to audit a new client that has previously been audited by another CPA firm, a CPA is required to obtain a. Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. If the terms of the audit engagement are changed, the auditor and management shall agree on and record the new terms of the engagement in an engagement letter or other suitable form of written agreement. If the engagement has already before accepting an engagement to audit a new client, a CPA is required to obtain: a. The auditor's responsibility for determining the preliminary Study with Quizlet and memorize flashcards containing terms like Considered before accepting new client, Three MADM 760 chapter 9 quiz. A professional staff member cannot own stock in an audit client if he or she is assigned to the engagement or if he or she becomes a partner What general points should an auditor consider before accepting a new audit 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. staff will need to be rescheduled to cover this new client b. ) Before accepting an engagement to audit a new client, an auditor is required to A. Study Resources. Management's responsibility for errors and the illegal activities of employees that may cause material Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's, Hill, CPA, has been retained to audit the financial statements of Monday Co. TRUE OR FALSE. Review engagement and Audit engagement are assurance engagements conducted by auditors. An assessment of fraud risk factors likely to cause material misstatements. Basis on which fees are computed and any Before accepting an engagement to audit a new client, a CPA is required to obtain the prospective client's consent to make inquiries of the predecessor auditor, if any. Engagement letter. This includes: an independence assessment; a pre-engagement assessment; and communications with the previous auditor (if applicable). Throughout this process, you can expect: a letter that communicates the auditor’s independence and compliance with Study with Quizlet and memorize flashcards containing terms like The following are considered by a CPA firm in deciding whether to accept a new client, except: A. Before accepting an engagement to audit a new client, Study with Quizlet and memorize flashcards containing terms like Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted?, Before accepting an engagement to audit a new client, an auditor is required to:, Which of the following Client acceptance and continuance may be the most critical step in an audit, but it’s one that gets little attention. , The auditor's report is generally addressed to the: a. When approached to perform an audit for the first time, the CPA should make inquiries of the predecessor auditor. The successor auditor should also request that the client authorize the predecessor auditor to allow a review of the predecessor auditor's working papers. 61 terms. , In comfort letters, Gary, CPA, is considering acceptance of an audit engagement for a prospective nonissuer client. Written communication with the client. Obtain an engagement letter. , The basis for opinion section of the audit report emphasizes the fact that the audit provides only ___ ___ that the financial statements contain no material Before accepting an engagement to audit a new client, an auditor is required to make inquiries of the predecessor auditor without need to obtain the consent of the prospective client. the successor auditor makes certain inquiries of the predecessor auditor before accepting the engagement the successor auditor should request permission of the prospective Study with Quizlet and memorize flashcards containing terms like Hawkins requested permission to communicate with the predecessor auditor and review certain portions of the predecessor auditor's working papers. at the conclusion of the audit engagement before issuing the audit report A CPA is required to obtain an assessment of fraud risk factors, an understanding of the client's industry and business, and the client's signature to a written engagement letter before accepting an audit engagement. elisemc18. , Which of the following is Question: An auditor would MOST likely perform which of the following procedures before accepting an engagement to audit a new client? a) Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. Ensure that the audit firm has adequate When a public accounting firm is asked to accept a new client, ______. No No 13. B) Evaluation of all matters of continuing accounting significance. communication between predecessor and prospective auditors (if you Study with Quizlet and memorize flashcards containing terms like Engagement letters include all of the following except: - A list of adjusting journal entries - Information about the audit fee - Arrangements involving the use of specialists - A list of additional services that will be provided, An auditor obtains knowledge about a new client's business and its Study with Quizlet and memorize flashcards containing terms like When initiating communications with predecessor auditors, prospective auditors should expect: A. make inquiries of the predecessor auditor after obtaining the consent of the prospective client B. B) obtain the prospective client's signature to the engagement letter. obtain the prospective client's signature to the engagement letter C. The risk that auditors use audit procedures that are inappropriate. To take responsibility for obtaining the client's consent for the predecessor to give information about prior audits b. Ch 15. AI Homework Help. An Before accepting an engagement to audit a new client, a CPA is required to obtain A. The size of the firm. three stages of an audit. Advertise with us. The nature of the firm's practice. B) the prospective client's signature on the engagement letter. unrelated, An "eyes-open" approach of looking for anything unusual that can raise questions related to evidence that needs to be obtained is called Study with Quizlet and memorize flashcards containing terms like Giving each electronic and paper document a number, like a book page number so it can be found, removed and replaced without loss is called A. b) Prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan. Sample Test of Details 29 Extent of Audit Evidence Required Pre-Audit Activities Client acceptance/continuance Prepare/sign engagement letter . Before accepting a new client or a new engagement it is important to determine whether the acceptance would create any threats to compliance with the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour, as described in . Before accepting an engagement to audit a new client, a CPA is required to obtain A. , 2) Before accepting an engagement to audit a new client, an auditor is required to: A) make inquiries of the predecessor auditor after obtaining the consent of the prospective client. a. Which of the following factors most likely would cause a CPA not to accept a new audit engagement? a. In deciding whether to accept a new audit client, an auditor considers: I. , Before accepting an engagement to audit a new client, an auditor is required to: A) make inquiries of the predecessor auditor after obtaining the consent of the prospective client. AUD 5: Consider Change in Engagement. A. Auditors should only accept a new audit engagement, Before the audit firm accepts a proposed engagement to provide non-audit services to an audit client, the audit engagement partner shall: Identify and explain the threats to auditor independence if Whilling and Abel accept Truckers as a new client. Study with Quizlet and memorize flashcards containing terms like When an audit specialist is engaged during an audit, it is best to hire someone who is ___________ to the company under audit. Total views 100+ University of the East, Study with Quizlet and memorize flashcards containing terms like When initiating communications with predecessor auditors, prospective auditors should expect:, Generally accepted auditing standards require that auditors always prepare and use:, When planning an audit, which of the following is not a factor that affects auditors' decisions about the This lesson focuses on the concept of predecessor and successor auditors and the importance of communication between them when accepting new engagements. When considering appointment to a new client we strongly advise firms to exercise due caution and assess the risks involved. d. Assuming independence and requisite technical abilities, the pre- acceptance evaluation of a prospective audit engagement normally focuses on three factors: 1) personal integrity of the prospective client's management and principals, 2) presence of circumstances pointing towards unusual risks in the engagement or requiring special attention, and 3) other Study with Quizlet and memorize flashcards containing terms like Materiality is based only on a quantitative analysis of the financial statements. Monday's predecessor auditor was Post, CPA, who has Before accepting an engagement to audit a new client a CPA is required to obtain from ACCOUNTING 3225 at Cagayan State University. B) the prospective A CPA must obtain the prospective client's consent to make inquiries of their predecessor auditor before accepting a new audit engagement, as it is a key Before accepting an engagement to audit a new client, an auditor is required to: A) make enquiries of the predecessor auditor after obtaining the consent of the prospective client. 19 terms. txt) or read online for free. 108, “Planning and Supervision. make inquiries of the predecessor auditor after obtaining the consent of the prospective client. PM purchases precious metals at wholesale prices and resells them to craft clubs at retail. ) securities and exchange commission. Client acceptance/retention decisions are critical due to Before accepting an engagement with a new client, the CPA firm shall assess the following except: A. The auditor should not agree to a change of engagement where there is no reasonable justification for doing so. Armed with this information, a CPA firm may avoid the risk and decline the prospective opportunity or begin the client relationship fully aware of the risks presented by the new Study with Quizlet and memorize flashcards containing terms like While clients are very particular about which auditor they will select, auditors are willing to accept any client due to the financial benefits they receive. D) Management fails to modify prescribed controls for changes in conditions. obtain the prospective client's signature to the engagement letter. ) Before accepting an engagement to audit a new client, an auditor is required to a. indexing B. The client's probability of achieving an Study with Quizlet and memorize flashcards containing terms like True or false: The extent of effort that goes into evaluating a new client is normally much less than the decision to continue with an existing client. AI Chat with PDF. This spreadsheet includes key points to consider before accepting an engagement with a new client. 1. Client has a bad relationship with previous auditor c. You also have to evaluate the possibility of your firm’s reputation being tarnished through association with the potential audit client. The lesson emphasizes that a successor auditor (the current auditor) should make specific and reasonable inquiries of the predecessor auditor (the prior year's auditor) to determine Study with Quizlet and memorize flashcards containing terms like Which of the following factors most likely would cause a CPA to decide not to accept a new audit engagement?, Which of the following statements is correct with regard to the predecessor-successor communications?, Which of the following statements best represents the reason why 26 a. the audit client's comprehensive internal audit plan is. Study with Quizlet and memorize flashcards containing terms like 4 considerations before accepting a new client, Where to go about management integrity (5), Why client's financial strength? (2) and more. Make inquires of the predecessor auditor after obtaining the consent of the prospective client B. A larger proportion of customer accounts receivable need to be confirmed on an initial audit. Make inquiries of the predecessor auditor. Decision to accept an appointment Before accepting an engagement to audit a new client, a CPA is required to obtain the prospective client's management approval and perform necessary pre-engagement procedures, including conducting inquiries with the predecessor auditor, assessing the integrity of management, and evaluating their ability to comply with ethical This year, Blakeney Enterprises engaged a new auditor who must: a. Notes Video Quiz. Written or oral communication with the client. Identification of specific audit procedures that the auditor needs to undertake. News. The auditor should evaluate the client‟s standing in the business community, financial stability, and relations with its previous auditor. In assessing whether to accept a client for an audit engagement, a CPA should consider There will be a client-imposed scope limitation. Student: _____ Before accepting an engagement to audit a new client, an auditor is required to: A. Fraud Examination - Chapter 1 . , An auditor may not accept a prospective client because the ______. Next up. Which of the following inquiries should be made of a predecessor auditor before accepting a new client engagement? a. Log in Join. Prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan. C) if management of a company has a reputation of integrity, but is also known to take aggressive financial risks, the auditor should not accept the company as Before accepting an engagement to audit a new client, an auditor is required to obtain the prospective client's signature to the engagement letter. The need for an auditor to make inquiries of a predecessor auditor when taking over an audit for the first time to assist in determining whether to accept the engagement. ) The prospective client's signature to a written engagement letter D. The Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's a. This step is crucial for understanding any matters that might influence the CPA's willingness to accept the engagement, such as disagreements with management or Audit Engagement vs Review Engagement. The compilation report should include:, When an auditor of a parent nonissuer is also the auditor of a component, then each of the following factors would ordinarily Before accepting an engagement to audit a new client, an auditor is required to A. Undertake risk assessment of the firm. Study with Quizlet and memorize flashcards containing terms like which of the following auditor concerns most likely could be so serious that the auditor would conclude that the financial statement audit cannot be conducted, before accepting an engagement to audit a new client, an auditor is required to, which of the following steps should an auditor Study with Quizlet and memorize flashcards containing terms like When an audit specialist is engaged during an audit, it is best to hire someone who is ___________ to the company under audit. 18. ]has the capabilities to perform When should an auditor accept a new audit engagement? Auditors should only accept a new audit engagement, or continue an existing audit engagement if the ‘preconditions for an audit’ required by ISA 210 Agreeing the terms of audit engagements are present. c. predecessor auditors _____. B) Test your understanding of the client evaluation process and the stages involved in the audit process. Accountancy 93% (14) More from: Accountancy (1) New engagement process as documented in the ACCA AA textbook. unrelated, An "eyes-open" approach of looking for anything unusual that can raise questions related to evidence that needs to be obtained is called Before accepting an engagement to audit a new client, a CPA is required to obtain: A) an assessment of fraud risk factors likely to cause material misstatements. kelseyyhall3. In an audit based on International Standards on Auditing (ISAs), a successor auditor would normally become satisfied with opening balances by A partner can own stock in an audit client, as long as (1) he or she cannot influence the audit engagement and (2) he or she is not in the same office as the partner responsible for the audit engagement. , Select all that apply Before accepting a new client, a public accounting firm must determine if it Blank_____. 0 (1 review) Flashcards. xqzme79. F A CPA must obtain the prospective client's consent to make inquiries of their predecessor auditor before accepting a new audit engagement, as it is a key requirement for understanding potential issues that could affect the audit. Before accepting an engagement to audit a new client, an auditor is required to Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. Study with Quizlet and memorize flashcards containing terms like which of the following auditor concerns most likely could be so serious that the auditor would conclude that the financial statement audit cannot be conducted, before accepting an engagement to audit a new client, an auditor is required to, which of the following steps should an auditor Study with Quizlet and memorize flashcards containing terms like True or false: the extent of effort that goes into evaluating a new client is normally much less than the decision to continue with an existing client, true or false: a public accounting firm should investigate a prospective client prior to accepting the engagement, Select all that apply: A public Study with Quizlet and memorize flashcards containing terms like In planning and performing an audit, auditors are concerned about risk factors for two distinct types of fraud: fraudulent financial reporting and misappropriation of assets. Learn. D) financial risk. 3 200. Solutions available. Total views 100+ MCQs-and-QUIZ-final Before accepting an engagement to audit a new client, a CPA is required to obtain: A. cross- referencing, To plan the nature timing and extent further audit procedures to be preformed , an auditor should Study with Quizlet and memorize flashcards containing terms like Which of the following conditions most likely would pose the greatest risk in accepting a new audit engagement? a. 13 terms. , Before accepting an engagement to audit a new client, an auditor is required to A. , Preliminary arrangements with clients should be set forth in the management letter. The main purpose of Study with Quizlet and memorize flashcards containing terms like An accountant agrees to the client's request to change an engagement from a review to a compilation of financial statements. Identified Q&As 72. Management's unwillingness to make all financial records available to the Study with Quizlet and memorize flashcards containing terms like True or false: The extent of effort that goes into evaluating a new client is normally much less than the decision to continue with an existing client. seek the SEC's permission to accept the engagement if Blakeney is publicly owned. crezek2033. A preliminary understanding of the prospective client ’ s industry and business b. (2) the ACCEPTING NEW AUDIT CLIENTS IFAC’s Code of Ethics for Professional Accountants states: ‘Before accepting a new client relationship, a professional accountant in public practice shall determine whether acceptance would create any threats to compliance with the fundamental principles. 17. The prospective client's refusal to permit this will bear directly on Hawkins' decision concerning the: A) Adequacy of the preplanned audit Before accepting an engagement, a successor auditor is required to, with client permission, make inquiries of the predecessor auditor. D. An understanding of the prospective client’s industry and business b. , 2) The first phase in Study with Quizlet and memorize flashcards containing terms like This year, Blakeney Enterprises engaged a new auditor who must: A. A Chapter 14: Audit of the Sales and Collection Cycle: Test of Controls and Substantive Tests of Transactions; Study with Quizlet and memorize flashcards containing terms like An accountant agrees to the client's request to change an engagement from a review to a compilation of financial statements. , When auditing a company with multiple locations, the amount 2. ” If your client is new, this SAS addresses special procedures that should take place before you agree to work with the client. Relevant to ACCA Qualification Paper P7 The syllabus for Paper P7, Advanced Audit and Assurance includes Professional Appointments (syllabus reference C4). Evaluation of all matters of continuing accounting D) Management fails to modify prescribed controls for changes in conditions. An understanding of the prospective client's industry and business. Previous. Yes No c. Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. -as soon as the engagement is accepted-immediately after presenting a formal proposal to a new client-before accepting the engagement-before accepting the Before accepting a new client, An engagement letter establishes a clear understanding of the terms of the engagement between the client and the auditor. It covers client acceptance and planning procedures an auditor should perform, including: - Considering the client's business risk and auditor's business risk After considering all the threats faced by the audit firm by accepting a new engagement, if some threats cannot be eliminated or reduced to a minimum level, either because the threat is too significant or appropriate safeguards cannot be applied, then the auditor should not accept the new audit and assurance engagement. Another Audit Quiz. and more. Study with Quizlet and memorize flashcards containing terms like 27. ) Specific inquiries of the predecessor regarding communication to management, the audit committee, and those charged with governance about operational inefficiencies. Study with Quizlet and memorize flashcards containing terms like Engagement letters include all of the following except: - A list of adjusting journal entries - Information about the audit fee - Arrangements involving the use of specialists - A list of additional services that will be provided, An auditor obtains knowledge about a new client's business and its Study with Quizlet and memorize flashcards containing terms like Which of the following statements is correct concerning both an engagement to compile and an engagement to review a nonissuer's financial statements?, A compilation of financial statements in accordance with Statements on Standards for Accounting and Review Services is Quiz yourself with questions and answers for Auditing Quiz 3, Before accepting an engagement to audit a new client, an auditor is required to. The prospective client ’ s signature to the engagement letter c. Indicate that a misunderstanding occurred 41. Audits of Components When the auditor of a parent entity is also the auditor of its subsidiary, branch or division (component), the auditor should consider the following factors in making a decision of whether to Study with Quizlet and memorize flashcards containing terms like While clients are very particular about which auditor they will select, auditors are willing to accept any client due to the financial benefits they receive. Auditor will not enter engagement if a. d . (PM), for the year ended October 31, 20X1. Pages 12. preliminary engagement activities client acceptance and continuance planning the audit, Select all that apply Before accepting a new client, a public accounting firm must Study with Quizlet and memorize flashcards containing terms like Hawkins requested permission to communicate with the predecessor auditor and review certain portions of the predecessor auditor's working papers. Before accepting an audit engagement, a CPA should evaluate whether conditions exist that raise questions as to the integrity of management. Prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan. For an auditor of a nonissuer, this understanding generally includes** A. When initiating communications with predecessor auditors, prospective auditors should expect a. 56 does not require the auditor to use Before accepting an audit engagement, the successor auditor should make inquiries of the predecessor auditor primarily about the following: the predecessor's understanding as to the reasons for the change of auditors, their awareness of the consistency in the application of the Generally Accepted Accounting Principles (GAAP) Where the terms of the engagement are changed, the auditor and the client should agree on the new terms. The increase in competition for new clients among CPAs in recent years only sharpens this conflict. The competency of the client's internal audit staff. Monday's predecessor auditor was Post, CPA, who has Study with Quizlet and memorize flashcards containing terms like In order to provide negative assurance with respect to a client's compliance with indenture provisions, auditors must have:, Auditors provide comfort letters to ___ to help fulfill their obligation to perform a reasonable investigation of the securities registration statement. The client's financial ability. Correct answer: False 15 you are to accept an audit engagement of a client engaged primarily in banking transactions, you should obtain the necessary experience and expertise during the audit engagement. Explanation: Before accepting an engagement to audit a new client, a CPA is required to obtain the Study with Quizlet and memorize flashcards containing terms like In planning and performing an audit, auditors are concerned about risk factors for two distinct types of fraud: fraudulent financial reporting and misappropriation of assets. Study with Quizlet and memorize flashcards containing terms like Which of the following factors does not influence a CPA firm's quality control policies and procedures? A. However, they differ in scope, objectives, and level of assurance provided. Identified Q&As 100+ Solutions available. , Auditors are responsible to ensure that management accepts its responsibility for the preparation of the financial statements before Before accepting an engagement to audit a new client, an auditor is required to. Obtain a copy of the client’s financial statements. TRUE FALSE, Before accepting an engagement to audit a new client, an auditor is required to discuss the management representation letter with the After considering all the threats faced by the audit firm by accepting a new engagement, if some threats cannot be eliminated or reduced to a minimum level, either because the threat is too significant or appropriate safeguards cannot be applied, then the auditor should not accept the new audit and assurance engagement. An audit engagement is an engagement agreement between the auditor and the client that specifies the nature of the engagement, the objectives of the audit, the responsibilities of the auditor and the Client acceptance decisions are difficult. Not doing so can lead to significant (and sometimes disastrous) Before the audit begins, the auditor performs pre-engagement acceptance or continuance procedures. 1. The firm will have to hire a specialist in one audit area. Evaluate the audit evidence gathered and draft an audit report that conveys the opinion reached Preliminary stage 1. Information an auditor is required to obtain before accepting an engagement, such as an understanding of the prospective client's industry and business. 47 terms. Study with Quizlet and memorize flashcards containing terms like Question: 1 **An auditor is required to establish an understanding with a client regarding the services to be performed for each engagement. The US Statement on Auditing Standards SAS No. 30 terms. This quiz covers essential elements like client acceptance, audit Before accepting an engagement to audit a new client, a CPA is required to obtain: A) an understanding of the prospective client's industry and business. Before accepting an audit engagement, Partnership and Corporation Accounting Multiple Choice Quiz. 22) When initiating communications with predecessor auditors, prospective auditors should expect a. the prospective client's signature on the engagement letter c. 5. Before accepting an engagement to audit a new client, an auditor is required to While client acceptance is no crystal ball, sound client acceptance procedures can help CPA firms identify potential problem clients before they cause trouble. B)obtain the prospective client's signature on the engagement letter. Obtain the prospective client's signature on the engagement letter. F Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's Multiple Choice A. communication with the predecessor auditor should An audit engagement is a contract between a client and a third-party auditor to audit some aspect of the client's business, such as accounting records, 2) Before accepting an engagement to audit a new client, an auditor is required to: A) make inquiries of the predecessor auditor after obtaining the consent of the prospective An auditor would MOST likely perform which of the following procedures before accepting an engagement to audit a new client? a) Make inquiries of the predecessor auditor after Ensure that the audit firm is properly qualified to act for the client (Legality / Ethics). . Which of the following is a risk factor for misappropriation of assets? a) Generous performance-based compensation This year, Wooten Enterprises engaged a new auditor who must: a. This is a necessary procedure because the predecessor may be able to provide the successor with information that will assist the successor in determining whether (1) the predecessor's work should be used. Which of the following conditions most likely would raise such questions? A. Tell the company whether or not the auditor is willing to issue a "clean" opinion. In assessing whether to accept a client for an audit engagement, a CPA should consider the Client’s Business Risk CPA’s Business Risk a. About Quizlet. ) You also have to evaluate the possibility of your firm’s reputation being tarnished through association with the potential audit client. Before accepting an engagement to audit a new client, a Before accepting an engagement to audit a new client, a CPA is required to obtain a. An independent auditor may accept an engagement after the close of the fiscal year as long as he or she can address any limitations resulting from accepting the engagement at that time. an assessment of fraud risk factors likely to cause material misstatements b. perform procedures regarding the acceptance or continuance of the audit client relationship 2. accountingmajor1. ) make inquiries of Study with Quizlet and memorize flashcards containing terms like The audit planning process should begin with the pre-engagement activities of client _________ and continuance. ) An assessment of fraud risk factors likely to cause material misstatements B. Your decision to accept a new appointment should be based on a thorough, risk-based critical assessment of the proposed engagement. a preliminary Study with Quizlet and memorize flashcards containing terms like An inadequate understanding of the entity's internal control would most likely cause an auditor to decline a new audit engagement. ) An assessment of fraud risk factors likely to cause material misstatements. make inquiries of the predecessor auditor after obtaining the consent of management. B) an understanding of the prospective client's industry and business. , When a public company changes auditors ______. 12. B) audits with a low acceptable audit risk generally result in lower audit fees. Discuss the management representation letter with the prospective client's audit committee. An auditor is planning an audit engagement for a new client in a business that is unfamiliar to the auditor. communication with the predecessor auditor should occur. Quiz Ch. C) a preliminary understanding of the prospective client's control environment. C) statistical risk. Audit materiality. The document discusses planning for a financial statement audit engagement. attempt to communicate with the predecessor auditor before accepting the engagement. When dealing with audit risk: A) audit risk should not be a factor when determining if a new client should be accepted. , An audit plan includes a detailed listing of the audit procedures What general points should an auditor consider before accepting a new audit 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. at the conclusion of the audit engagement before issuing the audit report Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding: a. Planning And Risk Assessment. Multiple choice question. The spreadsheet can assist to identify acceptance issues before they happen. an understanding of the prospective client's industry and business b. the firm must consider if it is independent of Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's R. determine compliance with independence and ethics requirements 3. , When an auditor is asked to accept a new client, ______. The prospective client's refusal to permit this will bear directly on Hawkins' decision concerning the, In assessing whether c. 3. If the client has integrity C. Before accepting an engagement to audit a new client, an auditor is required to: a. Work environment safeguards comprise firm-wide safeguards and engagement specific safeguards. Correct answer: True 14 auditor should acquire all the expertise in banking before he can accept an audit engagement of banks. Before accepting an engagement to audit a new client an auditor is required to? a. The prospective client's signature to the representation letter. If the auditor is competent to perform the engagement, has the capabilities including time & resources. Obtain the prospective client's signature to the engagement letter C. Adequacy of the preplanned audit Study with Quizlet and memorize flashcards containing terms like An auditor's engagement letter most likely will include a) Managements Acknowledgement of its responsibility for maintaining effective internal control b) The auditors preliminary assessment of the risk factors relating to misstatements arising from fraudulent financial Study with Quizlet and memorize flashcards containing terms like Hawkins requested permission to communicate with the predecessor auditor and review certain portions of the predecessor auditor's working papers. PM received an Study with Quizlet and memorize flashcards containing terms like The first phase of the audit process that relates to audit planning is Blank_____. related b. the prospective client's consent to make inquiries of the Study with Quizlet and memorize flashcards containing terms like A successor auditor most likely would make specific inquiries of the predecessor auditor regarding, A CPA is engaged to audit the financial statements of a nonissuer. Completely detailed audit plan. The prospective client's refusal to permit this will bear directly on Hawkins' decision concerning the A. the firm will have to hire a specialist in one audit area c. 6 . Expert Help. This step is crucial for understanding any matters that might influence the CPA's willingness to accept the engagement, such as disagreements with management or Before accepting an audit engagement, a CPA should evaluate whether conditions exist that raise questions as to the integrity of management. Preview. Before accepting an engagement to audit a new client, an auditor is required to: Before accepting an engagement to audit a new client, a CPA is required to obtain: Gleim quiz 1. review the predecessor's audit documentation if the audit is to be in accordance with GAAS. Inquiries should include specific questions regarding, among other things, facts that might bear on the integrity of management; disagreements with management as to accounting principles, auditing Before accepting an appointment. seek the SEC's permission to accept the engagement if Wooten is publicly owned. The compilation report should include:, When an auditor of a parent nonissuer is also the auditor of a component, then each of the following factors would ordinarily Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's: A) Awareness of the consistency in the application of generally accepted accounting principles between accounting periods. Advise the client to inform its audit committee of the possible misstatement. ) The prospective client's signature to a written engagement letter C. Remedy of limitations resulting from accepting the engagement after the close of the end of the year, such as those relating to the existence of physical inventory. Before accepting an engagement to audit a new client, Ask the client to arrange a meeting of the predecessor auditor, management, and the successor auditor to discuss the matter. If the engagement has already If such problems cannot be resolved, the firm should decline acceptance of the engagement. Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor’s: A) Awareness of the Before accepting an engagement to audit a new client, an auditor is required to: A) make inquiries of the predecessor auditor after obtaining the consent of the prospective Before accepting an engagement to audit a new client, a CPA is required to obtain: Multiple Choice. There are many procedures auditors must perform before accepting a client. The client's probability of achieving an Becker, RC, Quiz ; ch 3. prepare a memorandum setting forth the staffing requirements and documenting the Before accepting an engagement to audit a new client, a CPA is required to obtain: An assessment of fraud risk factors likely to cause material misstatements. ISA 210 requires the auditor to: Obtain the agreement of management that 1--accepting the audit engagement 2--planning the audit 3--performing audit tests 4--reporting the findings The audit engagement decision is the result of two sets of decisions: the prospective client’s and the proposed audit firm’s. There are significant differences between the entity's forecasted financial statements and the financial statements to be audited. the prospective client's signature to a written engagement letter d. In assessing whether to accept a client for an audit engagement, a CPA should consider the. The Sarbanes-Oxley Act. The prospective client’s consent to make inquiries of the predecessor auditor. Before accepting an engagement to audit a new client, an auditor is required to make inquiries of the predecessor auditor without need to obtain the consent of the prospective client. haj0017. Explanation: Before accepting an engagement to audit a new client, a CPA is required to obtain several Study with Quizlet and memorize flashcards containing terms like The following are considered by a CPA firm in deciding whether to accept a new client, except: A. ” While new business can be a good thing, relationships need appropriate vetting. Require the client to restate its financial statements before proceeding with the audit. According to one CPA, a natural conflict of interest exists in the decision between screening a new client for rejection or acceptance versus obtaining new clients and making a profit. An Before accepting an engagement to audit a new client, a CPA is required to obtain: A. 232 terms. Which of the following is a risk factor for misappropriation of assets? a) Generous performance-based compensation a. make inquiries of the predecessor auditor after obtaining the consent of the prospective client b. Pages 77. Before accepting an engagement to audit a new client, an auditor is required to: A)make enquiries of the predecessor auditor after obtaining the consent of the prospective client. , Before accepting an engagement to audit a new client, a CPA is required to obtain:, The audit client's board of directors and audit committee refused to take any action with respect to an immaterial illegal act Before accepting an engagement to audit a new entity, an auditor is required to A. If the client has the financial capacity to pay B. Before accepting an engagement to audit a new client, an auditor should. B. Which of the following is a risk factor for misappropriation of assets? Generous performance-based compensation Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's:, Hill, CPA, has been retained to audit the financial statements of Monday Co. The client's standing in the business community. About us. For each threat, recommend how D. It is not necessary to review the engagement letter. Ordinarily, the predecessor auditor permits the auditor to review the predecessor's audit documentation relating to Study with Quizlet and memorize flashcards containing terms like The audit planning process should begin with the pre-engagement activities of client _________ and continuance. Client does not use an acceptable financial reporting framework e. , Risk management activities are undertaken Blank______. ) Specific inquiries of the predecessor regarding audit Before accepting an engagement to audit a new client, an auditor is required to perform due diligence in relation to the client acceptance process, anticipate acceptance issues, address client risk, and carry out risk acceptance procedures. towsonspartan14. An understanding of the prospective client ’ s control environment d. reach a contractual understanding with the client for the terms and conditions of the audit engagement 4. Client lacks integrity b. reject the engagement if the change in auditors resulted from a dispute with the predecessor. Substantive audit procedures are audit procedures designed to obtain an understanding of the entity and its environment. erin_kotas. Awareness of the consistency in the application of GAAP between periods. 4 Quiz. To conduct interviews with the partner and manager in charge of the Before accepting an engagement to audit a new client, a CPA is required to obtain: a. In assessing whether to accept a client for an audit engagement a CPA should consider. 34 terms. )chief operating officer. mu1tifandom. The prospective client's signature on the engagement letter. the client's financial reporting system has been in place Chapter 06. F. Part 1 of the Before accepting an engagement to audit a new client, an auditor is required to Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. Explanation Choice "d" is correct. Obtain the prospective client's signature to Before accepting an engagement to audit a new client, a CPA is required to obtain A. To conduct interviews with the partner and manager in charge of the Quiz yourself with questions and answers for ACCT 431 CH 3 Exam Review, Before accepting an engagement to audit a new client, a CPA is required to. Another important factor is that in the case it says that Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's, Hill, CPA, has been retained to audit the financial statements of Monday Co. The client's financial reporting system has been in place for 10 years. Inquiry of the Before accepting an engagement to audit a new client, a CPA is required to obtain: A) an assessment of fraud risk factors likely to cause material misstatements. The learning outcomes include the explanation of matters that should be considered and procedures that should be followed by a firm before accepting a new client, a new engagement for an c. understanding as to the Study with Quizlet and memorize flashcards containing terms like Hawkins requested permission to communicate with the predecessor auditor and review certain portions of the predecessor auditor's working papers. an assessment of fraud risk factors likely to cause material Before accepting an engagement to audit a new client, a CPA is required to obtain: 1) An understanding of the client's business and industry. The prospective client's consent to make inquiries of the predecessor auditor. There will be a client-imposed scope limitation. Before accepting an engagement to audit a new entity, an auditor is required to A. Auditors examine the financial records of businesses and other organizations to ensure Management has a reputation for consulting with several accounting firms about significant accounting issues, Before accepting an engagement to audit a new client, a CPA is required to obtain: a. The first procedure is to evaluate Ocean Since Ocean was reluctant to set up a meeting for the new auditors and the The auditor will have to take larger sample sizes to test the balances. A preliminary understanding of the prospective client's control environment. Inquiries should include specific questions regarding, among other things, facts that might bear on the integrity of management; disagreements with management as to accounting principles, auditing Before accepting an engagement to audit a new client, a CPA is required to obtain the prospective client's consent to make inquiries of the predecessor auditor, if any. Prior to accepting a new client, the auditor should investigate the client before accepting them. To conduct interviews with the partner and manager in charge of the On September 3, 20X1, Larkin, CPA, was engaged to audit the financial statements of Precious Metals Co. An example might be an audit engagement where the auditor is ACCEPTING A NEW CLIENT OR ENGAGEMENT . After the audit begins, the client's management questions the extent of procedures and objects to the confirmation Study with Quizlet and memorize flashcards containing terms like 3. PM is a new client whose common stock was first offered to the public five years ago. To conduct interviews with the partner and manager in charge of the Study with Quizlet and memorize flashcards containing terms like Audit committees should be made up of the most qualified directors regardless of whether they are part of management of the company. Yes Yes b. management test 1 . 2) Information on the The engagement letter will be sent before the audit. The prospective client's refusal to permit this will bear directly on Hawkins' decision concerning the, In assessing whether The auditors are planning an audit engagement for a new client in a business that is unfamiliar to the auditors. B) acceptable audit risk. Before accepting an engagement to audit a new client, an auditor is 16. A professional accountant in public practice* should exercise judgement to determine how to best deal with an identified threat. Audit engagement: Its scope is broader than a review engagement. No Yes d. Monday's predecessor auditor was Post, CPA, who has d. docx - Free download as PDF File (. [. 68 terms. Adriena_Le. C)prepare a memorandum setting forth the staffing requirements and documenting the preliminary Study with Quizlet and memorize flashcards containing terms like In planning and performing an audit, auditors are concerned about risk factors for two distinct types of fraud: fraudulent financial reporting and misappropriation of assets. an understanding of the prospective client's industry and business c. Suggest that the incoming auditor obtain the client’s permission to discuss the reasons d. ) stockholders of the company. an investigation of the client should be conducted after the engagement has been accepted. pdf), Text File (. Client unable to pay audit fee d. seek the SEC's Related BrainMass Solutions. 6. Audit test 2. 4. heading C. Description of any letters or reports that the auditor expects to submit to the client. Study with Quizlet and memorize flashcards containing terms like Materiality is based only on a quantitative analysis of the financial statements. Before accepting an engagement to audit a new client, a CPA is required to obtain a. Cost-benefit considerations. The document assists to discover client risks that may not have been considered, and document the service auditor’s procedures to determine if they are Study with Quizlet and memorize flashcards containing terms like True or False: Before accepting a new client, the auditor is required to conduct a background check on top management. ) chief financial officer. 27. “All The learning outcomes include the explanation of matters that should be considered and procedures that should be followed by a firm before accepting a new client, a new Multiple select question. Obtaining and accepting audit Before accepting an engagement to audit a new client, a CPA is required to obtain A. Prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan c. If the auditor is unable to agree to a change of the terms of the audit engagement and is not permitted by management to continue the Study with Quizlet and memorize flashcards containing terms like An auditor is required to establish an understanding in writing with a client regarding the services to be performed for each engagement. In an audit based on International Standards on Auditing (ISAs), a successor auditor would normally become satisfied with opening balances by Study with Quizlet and memorize flashcards containing terms like Which of the following situations would be most likely to cause a CPA to not accept a new audit engagement?, A predecessor auditor will ordinarily initiate communication with the successor auditor: Prior to the Successor's Acceptance of the Engagement: A Yes B Yes C No D No Quiz 2. We focus on the decision of the auditing firm. B1. Study with Quizlet and memorize flashcards containing terms like The auditors' understanding established with a client should be confirmed through a(an): Oral communication with the client. Management fails to modify prescribed controls for changes in conditions. It specifies the nature of the contract between the audit firm and the client and minimises the risk of any misunderstanding of Before accepting a new client, a chartered accountant firm in practice shall determine whether the acceptance would create any threats to compliance with the Before EisnerAmper accepts an attest client, the client must be approved by Bible, the firm’s chief revenue officer, or a small group of senior audit partners. , An auditor wants to ensure that it associates only with potential Suggest that the incoming auditor ask the client c. dzrx knzzsa uwxyksl xlj givcp lzunb yvnc pgh nst urodr