Auditing Engagement Acceptance Flashcards

Flashcards on Auditing Engagement Acceptance

Audit Plan

A plan to reduce audit risk to an acceptable level by identifying risks, considering audit areas, and ensuring efficient work and supervision.

Accepting an Engagement

The initial phase of an audit where the partner takes on professional responsibilities to the client and public.

Client Evaluation

An important element of quality control, ensuring firm policies and procedures have been followed appropriately.

Client Relationship Basis

Information about the entity's nature, resources, and access to information to perform the engagement according to standards.

Firm Priorities

The audit firm's financial and operational priorities should not lead to inappropriate engagement decisions.

Promoting Audit Services

Delivering high-quality services, as auditing services cannot be marketed like commercial services.

Tendering for Audits

Process of evaluating auditors and calling for competitive tenders to ensure high quality and cost-efficient audits.

Ethical Clearance

Important to obtain from the previous auditor when replacing them, to gather necessary information before accepting the client.

Integrity of Management

Essential to evaluate, as a lack of it increases the probability of material misstatements in financial statements.

Reasonable Assurance

Auditors seek this when evaluating a prospective or existing client to ensure management is trustworthy.

Auditor's Legal Liability

Varies depending on the intended uses of the audit report, so the auditor must identify intended users.

PES 1

Requires auditors to identify and assess threats to independence and apply safeguards.

Assess Competence

The audit team needs the necessary capability, competence, and capacity to provide assurance services.

Engagement Letter

Confirms the auditor's acceptance and defines the objective, scope, and form of the auditor's report.