1. The document discusses guidance from ACCA on accepting engagements and considerations such as assessing threats, competence, contacting the previous auditor, agreeing terms in an engagement letter, and handling client information and liens.
2. Quality control procedures are discussed like training leaders, planning with competent staff, focusing on risks, consulting experts, and safeguarding independence.
3. A hot review is defined as reviewing an audit file before the report is issued, particularly for listed companies in the public interest or risky engagements, to improve judgement quality.
The document discusses the responsibilities of auditors and management regarding regulations. It states that management is responsible for abiding by regulations, while auditors are responsible for obtaining reasonable assurance that financial statements are free from material misstatement due to fraud or error. Auditors must also obtain sufficient evidence that the entity is in compliance with regulations that have a direct effect on financial statements, such as tax laws. To do so, auditors understand the applicable regulations, see how the entity complies, speak to those responsible, and obtain written confirmation. They also update their understanding of regulations and inquire with management about fundamental regulations, compliance, and how litigation risks are identified, evaluated, and accounted for. The document lists potential indicators of noncompliance, such
The document outlines 4 steps for accepting a new audit appointment: 1) Check for any professional problems like independence or conflict of interest. 2) Ensure sufficient resources and staff are available. 3) Get references from the company and directors. 4) Communicate professionally with the old auditors about the client and audit work after getting client permission.
This document discusses professional responsibilities related to client acceptance and engagement procedures for an audit. It addresses evaluating potential integrity threats and obtaining client permission when replacing an old auditor. The document also covers obtaining permission to contact the old auditors, agreeing on the scope of the audit, and sending an engagement letter. It discusses making changes to the engagement letter if the scope changes or due to new laws or standards. The engagement letter content includes responsibilities of directors and auditors, scope of the audit, applicable fees, and other services.
The document discusses business ethics and auditing. It defines business ethics as the examination of how people and institutions should behave in commerce. It also outlines some key principles of business ethics like avoiding exploitation of consumers and paying taxes regularly. The document then defines auditing as the inspection and verification of business accounts by an independent accountant. It discusses the objectives and types of auditing, as well as cost auditing and management auditing. Finally, it covers the meaning, rights, duties, and liabilities of an auditor.
The document discusses audit planning, which involves establishing the overall audit strategy and developing a detailed audit plan. The audit strategy addresses the scope of the audit, resources and timing, while the plan provides instructions on risk assessment procedures, further audit procedures, and other actions to comply with auditing standards. Both the strategy and plan are updated as needed in response to new information obtained during planning or the audit. Documentation of key decisions is important.
The document provides details about a case study on forensic audit. It discusses what forensic audit is, types of fraud, the fraud triangle model, and the Satyam fraud case. The Satyam case involved falsified financial statements, inflated revenues and profits, fake bank balances and fixed deposits totaling Rs. 7,800 crores. Weak internal controls and governance failures at Satyam such as unethical conduct, false books, dubious roles of directors, auditors and banks allowed the fraud to occur and go undetected for years.
The document provides an overview of cost audit in India. It defines cost audit as the verification of cost records and accounts to check adherence to cost accounting procedures. It discusses the origin and evolution of cost audit in India in response to government price controls and consumer complaints. The principles, purpose, scope and objectives of cost audit are explained, including verifying cost accounting compliance, evaluating efficiencies, and providing management with cost information for decision making.
The document discusses forensic accounting and investigations. It covers examining financial matters and providing analysis for legal disputes, investigating fraud, insurance claims, and professional negligence. Key aspects include locating documents, assets, and companies; gathering proof of events; conducting interviews and due diligence; and evaluating evidence to quantify losses. Reports must cover the key issues, scope, approach, findings and limitations while expert reports require information on qualifications, materials used, and implications.
The document discusses the responsibilities of auditors and management regarding regulations. It states that management is responsible for abiding by regulations, while auditors are responsible for obtaining reasonable assurance that financial statements are free from material misstatement due to fraud or error. Auditors must also obtain sufficient evidence that the entity is in compliance with regulations that have a direct effect on financial statements, such as tax laws. To do so, auditors understand the applicable regulations, see how the entity complies, speak to those responsible, and obtain written confirmation. They also update their understanding of regulations and inquire with management about fundamental regulations, compliance, and how litigation risks are identified, evaluated, and accounted for. The document lists potential indicators of noncompliance, such
The document outlines 4 steps for accepting a new audit appointment: 1) Check for any professional problems like independence or conflict of interest. 2) Ensure sufficient resources and staff are available. 3) Get references from the company and directors. 4) Communicate professionally with the old auditors about the client and audit work after getting client permission.
This document discusses professional responsibilities related to client acceptance and engagement procedures for an audit. It addresses evaluating potential integrity threats and obtaining client permission when replacing an old auditor. The document also covers obtaining permission to contact the old auditors, agreeing on the scope of the audit, and sending an engagement letter. It discusses making changes to the engagement letter if the scope changes or due to new laws or standards. The engagement letter content includes responsibilities of directors and auditors, scope of the audit, applicable fees, and other services.
The document discusses business ethics and auditing. It defines business ethics as the examination of how people and institutions should behave in commerce. It also outlines some key principles of business ethics like avoiding exploitation of consumers and paying taxes regularly. The document then defines auditing as the inspection and verification of business accounts by an independent accountant. It discusses the objectives and types of auditing, as well as cost auditing and management auditing. Finally, it covers the meaning, rights, duties, and liabilities of an auditor.
The document discusses audit planning, which involves establishing the overall audit strategy and developing a detailed audit plan. The audit strategy addresses the scope of the audit, resources and timing, while the plan provides instructions on risk assessment procedures, further audit procedures, and other actions to comply with auditing standards. Both the strategy and plan are updated as needed in response to new information obtained during planning or the audit. Documentation of key decisions is important.
The document provides details about a case study on forensic audit. It discusses what forensic audit is, types of fraud, the fraud triangle model, and the Satyam fraud case. The Satyam case involved falsified financial statements, inflated revenues and profits, fake bank balances and fixed deposits totaling Rs. 7,800 crores. Weak internal controls and governance failures at Satyam such as unethical conduct, false books, dubious roles of directors, auditors and banks allowed the fraud to occur and go undetected for years.
The document provides an overview of cost audit in India. It defines cost audit as the verification of cost records and accounts to check adherence to cost accounting procedures. It discusses the origin and evolution of cost audit in India in response to government price controls and consumer complaints. The principles, purpose, scope and objectives of cost audit are explained, including verifying cost accounting compliance, evaluating efficiencies, and providing management with cost information for decision making.
The document discusses forensic accounting and investigations. It covers examining financial matters and providing analysis for legal disputes, investigating fraud, insurance claims, and professional negligence. Key aspects include locating documents, assets, and companies; gathering proof of events; conducting interviews and due diligence; and evaluating evidence to quantify losses. Reports must cover the key issues, scope, approach, findings and limitations while expert reports require information on qualifications, materials used, and implications.
The document discusses the pros and cons of outsourcing as well as factors to consider when outsourcing. It notes that outsourcing can provide cost savings, flexibility, and access to expertise, but may result in less control, conflicts of interest, or being stuck in long-term contracts. When deciding whether to outsource, organizations should consider whether the work involves areas of judgment, specialist expertise is required, activities are core or non-core, and the potential impacts on auditing the outsourced operations.
The document discusses considerations for group audits and transnational audits. For group audits, component auditors can be relied upon if they are competent and no issues have been identified. The group auditor needs to understand consolidation, tax, and going concern issues relating to subsidiaries. For transnational audits, auditors must consider cultural and regulatory differences between jurisdictions. Value differences, component auditor competency, reporting frameworks, and listing requirements all need to be evaluated. Current issues include large audit firms merging and the hierarchy within international audit networks.
The document discusses the structure and content of an audit report based on ISA 700. It explains that an audit report includes sections for the title, introductory paragraph, management and auditor responsibilities, modifications to the opinion if needed, the audit opinion itself which can be unmodified or modified, and other matters like an emphasis of matter paragraph. It describes the different types of modified opinions including qualified, adverse, and disclaimer opinions based on the level of misstatements or insufficient evidence. The document provides details on each section of the audit report and its purpose.
The document discusses different types of assurance engagements including review engagements, agreed upon procedures, and compilation agreements. Review engagements involve examining financial statements and issuing a report providing moderate assurance. Agreed upon procedures involve verifying specific items like account balances and reporting results without assurance. Compilation agreements involve compiling financial statements without testing and providing no assurance.
The document outlines the topics that would be discussed in reports to management arising from an audit. These include operational issues, matters arising from the audit, how the audit was conducted, times and dates, points of contact, the management letter outlining any weaknesses found, significant findings such as fraud, accounting issues, and modifications to the report. It also discusses communicating internal control significant deficiencies identified during the audit to management and those charged with governance as required by auditing standards.
The document discusses questions and answers related to audit evidence. It covers topics like how much evidence is needed, factors that increase reliability, reasons for gathering evidence, ways to gather evidence including analytical procedures, limitations of different types of evidence sources, use of experts, and procedures for identifying related parties.
The document discusses the procedures for completing an audit, including initial engagements, comparative information, other information, post statement of financial position events, going concern considerations, and final procedures. It covers assessing opening balances and prior year adjustments in initial engagements, compliance with financial reporting frameworks and treatment of prior period adjustments in comparatives. It also addresses identifying inconsistencies in other information, adjusting and non-adjusting post-statement of financial position events, evaluating management's going concern assessment, and risk indicators.
The document discusses different strategies for changing business processes, including rationalization, redesign, automation, and outsourcing. It provides a matrix for evaluating which strategy is best based on the importance and complexity of the process. Business process reengineering (BPR) is described as a 5-step approach involving analyzing current workflows, redesigning alternatives, developing a new process, transitioning to the new process, and evaluating the results. Outsourcing benefits like cost savings and drawbacks like loss of control are also outlined.
The document provides guidelines for accountants regarding advertisements and fees. Advertisements must not damage the reputation of the professional body, firm, or profession. They must not be misleading or disparage other firms' services. Fees should be disclosed upfront, reflect staff experience and work importance, and generally not be percentage- or contingency-based unless convention allows. Descriptions like "Chartered Accountants" can be used if over half partners are ACCA members and principals control over 51% of voting rights.
The document discusses quality control procedures for audit firms. It covers establishing a quality control system that addresses leadership responsibilities, ethical requirements, acceptance and continuance of engagements, human resources, engagement performance, monitoring, and documentation. It also discusses quality control procedures for individual audits, including direction of audit staff, hot reviews, post-audit reviews, and reviews by managers, partners and specialists.
The document discusses the differences and relationships between fraud and error in accounting. It notes that fraud is intentional while error can occur due to misinterpretation or incorrect accounting. Management has primary responsibility for preventing and detecting fraud and establishing proper internal controls and corporate governance. Auditors are responsible for obtaining reasonable assurance about whether the financial statements are free of material misstatement due to fraud or error. If fraud is suspected, auditors should perform additional testing, discuss with management, and consider reporting and legal impacts. The document also covers auditor responsibilities and potential criminal and civil liabilities related to negligence.
The document discusses various ethical issues and threats that may arise, as well as potential safeguards and actions that can be taken to address them. Some of the key issues covered include self-interest, familiarity threats, intimidation threats, conflicts of interest, and maintaining confidentiality. The document provides guidance on when it may be necessary to decline an engagement, establish independent reviews, remove individuals from engagement teams, or discuss issues with clients.
The document outlines the syllabus for the P7 professional exam. It is divided into 7 sections that cover key audit areas: (1) regulatory environment issues like money laundering and regulations, (2) ethics and applying ethical concepts to scenarios, (3) practice management responsibilities as the commercial head, (4) audit processes from planning to review, (5) other assignments like prospective forensic audits and outsourcing, (6) reporting conclusions and opinions, and (7) current developments and their impact. The exam itself contains 2 case studies testing multiple syllabus areas and 2 from 3 shorter questions focusing on one area each. Successful candidates will demonstrate application of knowledge to scenarios and professional competency.
The document provides guidance on advertising, use of the ACCA logo, fees, allowable fee bases, introductory fees, tendering, reasons an auditor may step down, worries related to an auditor stepping down, ethics considerations for tenders, information needed for tenders, and components of a tender document. It advises that advertising should not reflect adversely on members, ACCA, or the profession. Fees should be disclosed and the basis shown to minimize disputes. Introductory fees must be disclosed to clients.
The document discusses the concept of materiality in auditing based on ISA 320. It states that materiality considers both the size and nature of misstatements in the context of the financial statements. Materiality thresholds vary between audit firms but commonly use benchmarks like 1-2% of revenue, 5-10% of profit before tax, and 5-10% of assets. Materiality is also assessed based on the significance of individual financial statement items and whether misstatements could impact trends in the financial statements. Materiality is determined during audit planning and is revised as the audit progresses if needed.
The document discusses various aspects of audit evidence and procedures. It covers sources of audit evidence like previous audits and quality procedures. It also discusses audit procedures like inspection, observation, and confirmation. It outlines key assertions related to transactions, balances, and disclosures. It provides information on using the work of experts, evaluating related parties, relying on internal auditors, and management representation letters.
The document discusses the pros and cons of outsourcing as well as factors to consider when outsourcing. It notes that outsourcing can provide cost savings, flexibility, and access to expertise, but may result in less control, conflicts of interest, or being stuck in long-term contracts. When deciding whether to outsource, organizations should consider whether the work involves areas of judgment, specialist expertise is required, activities are core or non-core, and the potential impacts on auditing the outsourced operations.
The document discusses considerations for group audits and transnational audits. For group audits, component auditors can be relied upon if they are competent and no issues have been identified. The group auditor needs to understand consolidation, tax, and going concern issues relating to subsidiaries. For transnational audits, auditors must consider cultural and regulatory differences between jurisdictions. Value differences, component auditor competency, reporting frameworks, and listing requirements all need to be evaluated. Current issues include large audit firms merging and the hierarchy within international audit networks.
The document discusses the structure and content of an audit report based on ISA 700. It explains that an audit report includes sections for the title, introductory paragraph, management and auditor responsibilities, modifications to the opinion if needed, the audit opinion itself which can be unmodified or modified, and other matters like an emphasis of matter paragraph. It describes the different types of modified opinions including qualified, adverse, and disclaimer opinions based on the level of misstatements or insufficient evidence. The document provides details on each section of the audit report and its purpose.
The document discusses different types of assurance engagements including review engagements, agreed upon procedures, and compilation agreements. Review engagements involve examining financial statements and issuing a report providing moderate assurance. Agreed upon procedures involve verifying specific items like account balances and reporting results without assurance. Compilation agreements involve compiling financial statements without testing and providing no assurance.
The document outlines the topics that would be discussed in reports to management arising from an audit. These include operational issues, matters arising from the audit, how the audit was conducted, times and dates, points of contact, the management letter outlining any weaknesses found, significant findings such as fraud, accounting issues, and modifications to the report. It also discusses communicating internal control significant deficiencies identified during the audit to management and those charged with governance as required by auditing standards.
The document discusses questions and answers related to audit evidence. It covers topics like how much evidence is needed, factors that increase reliability, reasons for gathering evidence, ways to gather evidence including analytical procedures, limitations of different types of evidence sources, use of experts, and procedures for identifying related parties.
The document discusses the procedures for completing an audit, including initial engagements, comparative information, other information, post statement of financial position events, going concern considerations, and final procedures. It covers assessing opening balances and prior year adjustments in initial engagements, compliance with financial reporting frameworks and treatment of prior period adjustments in comparatives. It also addresses identifying inconsistencies in other information, adjusting and non-adjusting post-statement of financial position events, evaluating management's going concern assessment, and risk indicators.
The document discusses different strategies for changing business processes, including rationalization, redesign, automation, and outsourcing. It provides a matrix for evaluating which strategy is best based on the importance and complexity of the process. Business process reengineering (BPR) is described as a 5-step approach involving analyzing current workflows, redesigning alternatives, developing a new process, transitioning to the new process, and evaluating the results. Outsourcing benefits like cost savings and drawbacks like loss of control are also outlined.
The document provides guidelines for accountants regarding advertisements and fees. Advertisements must not damage the reputation of the professional body, firm, or profession. They must not be misleading or disparage other firms' services. Fees should be disclosed upfront, reflect staff experience and work importance, and generally not be percentage- or contingency-based unless convention allows. Descriptions like "Chartered Accountants" can be used if over half partners are ACCA members and principals control over 51% of voting rights.
The document discusses quality control procedures for audit firms. It covers establishing a quality control system that addresses leadership responsibilities, ethical requirements, acceptance and continuance of engagements, human resources, engagement performance, monitoring, and documentation. It also discusses quality control procedures for individual audits, including direction of audit staff, hot reviews, post-audit reviews, and reviews by managers, partners and specialists.
The document discusses the differences and relationships between fraud and error in accounting. It notes that fraud is intentional while error can occur due to misinterpretation or incorrect accounting. Management has primary responsibility for preventing and detecting fraud and establishing proper internal controls and corporate governance. Auditors are responsible for obtaining reasonable assurance about whether the financial statements are free of material misstatement due to fraud or error. If fraud is suspected, auditors should perform additional testing, discuss with management, and consider reporting and legal impacts. The document also covers auditor responsibilities and potential criminal and civil liabilities related to negligence.
The document discusses various ethical issues and threats that may arise, as well as potential safeguards and actions that can be taken to address them. Some of the key issues covered include self-interest, familiarity threats, intimidation threats, conflicts of interest, and maintaining confidentiality. The document provides guidance on when it may be necessary to decline an engagement, establish independent reviews, remove individuals from engagement teams, or discuss issues with clients.
The document outlines the syllabus for the P7 professional exam. It is divided into 7 sections that cover key audit areas: (1) regulatory environment issues like money laundering and regulations, (2) ethics and applying ethical concepts to scenarios, (3) practice management responsibilities as the commercial head, (4) audit processes from planning to review, (5) other assignments like prospective forensic audits and outsourcing, (6) reporting conclusions and opinions, and (7) current developments and their impact. The exam itself contains 2 case studies testing multiple syllabus areas and 2 from 3 shorter questions focusing on one area each. Successful candidates will demonstrate application of knowledge to scenarios and professional competency.
The document provides guidance on advertising, use of the ACCA logo, fees, allowable fee bases, introductory fees, tendering, reasons an auditor may step down, worries related to an auditor stepping down, ethics considerations for tenders, information needed for tenders, and components of a tender document. It advises that advertising should not reflect adversely on members, ACCA, or the profession. Fees should be disclosed and the basis shown to minimize disputes. Introductory fees must be disclosed to clients.
The document discusses the concept of materiality in auditing based on ISA 320. It states that materiality considers both the size and nature of misstatements in the context of the financial statements. Materiality thresholds vary between audit firms but commonly use benchmarks like 1-2% of revenue, 5-10% of profit before tax, and 5-10% of assets. Materiality is also assessed based on the significance of individual financial statement items and whether misstatements could impact trends in the financial statements. Materiality is determined during audit planning and is revised as the audit progresses if needed.
The document discusses various aspects of audit evidence and procedures. It covers sources of audit evidence like previous audits and quality procedures. It also discusses audit procedures like inspection, observation, and confirmation. It outlines key assertions related to transactions, balances, and disclosures. It provides information on using the work of experts, evaluating related parties, relying on internal auditors, and management representation letters.