- 20 Marks
AAA – Nov 2024 – L3 – Q4 – Quality Management and Audit Documentation
Prepare a brief on quality management and address staff queries on audit reviews and documentation at Sowah Accountants.
Question
You have just joined the partnership of a small firm of Chartered Accountants, Sowah Accountants & Partners (‘Sowah’), and have been asked to prepare a communication brief for distribution to all staff which will then be followed by a presentation with a question and answer session. The communication brief required is regarding quality management and audit working papers.
ISA 220 requires Sowah’s system of quality management to be implemented at the engagement level and ISOM 1 requires it to be implemented at the level of the audit firm. The partners are concerned that the firm’s system of quality management may not be satisfactory, as it has not been reviewed since first implemented five years ago. In addition, although staff are able to read the policies and procedures relating to quality management
in the staff manual, there are currently no other ways in which the information is communicated to them.
Required:
(a) Prepare a communication brief for distribution to all staff which explains:
(i) why a system of quality management is necessary
(ii) the components that must be addressed by a system of quality management
(iii) the engagements for which an engagement quality review is compulsory.
(b) Answer the following queries which were asked at the question and answer session:
(i) What is the difference between a hot review and a cold review and why are both necessary?
(ii) Why is it so important that all audit reasons and justifications are documented in the working papers when it should be obvious from test results what the key issues are?
(iii) Why do audit working papers have to be standardised; surely this inhibits auditors exercising their skills and experience in the most effective way?
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