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AA – L2 – Q16 – Planning an Audit

Explain the need for audit planning and its benefits per ISA 300. Outline steps to take before auditing a long-term limited company client. Explain how internal auditor's planning differs from external auditor's.

Question

ISA 300 Planning an Audit of Financial Statements requires the auditor to plan his audit work so that the audit will be performed in an effective manner.

Required:

(a) Explain why the need for planning exists and what benefits are to be derived from adopting such an approach.

(b) Set out the steps you would take prior to the commencement of an audit of a limited company which has been a client for a number of years.

(c) Planning is equally relevant to the work of the internal auditor. Explain how the internal auditor’s planning differs to that of the external auditor.

Answer

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Tags: Audit Planning, Audit Procedures, Audit Team, Client Engagement, Longstanding Client
Level: Level 2

Topic: Planning an Audit

AA – L2 – Q1 – Professional Ethics and Code of Conduct for Auditors

Discuss the independence threat from an audit manager holding shares in Sycamore and required safeguards.

Question

It has been suggested that the most important matter affecting the credibility of the auditor is that of ‘independence’.

Required

Comment on the following situations in the context of the independence of the auditor, showing clearly the threats involved and the safeguards required by the IESBA International Code of Ethics for Professional Accountants:

(a) The audit manager in charge of the audit assignment of Scott holds 1,000 $1 ordinary shares in the company (total shares in issue – 100,000). The audit partner holds no shares.

(b) An audit partner of a firm of Chartered Accountants is a personal friend of the chief accountant of Peters Ltd. The chief accountant is not a director of the company and the partner is not responsible for the audit of Peters Ltd.

(d) The audit senior in charge of the audit of Green, a bank, has a personal loan from the Green Bank of $2,000 on which he is currently paying a market rate of interest.

(e) An audit partner is responsible for two audit assignments: Pepper and Tomato. Pepper has recently tendered for a contract with Tomato for a supply of material quantities of goods over a number of years. Tomato has asked the audit partner to advise on the matter

Answer

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Tags: Audit Team, Auditor Independence, Financial Interest, IESBA Code, Self-Interest Threat
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors (IESBA Code)

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AA – L2 – Q16 – Planning an Audit

Explain the need for audit planning and its benefits per ISA 300. Outline steps to take before auditing a long-term limited company client. Explain how internal auditor's planning differs from external auditor's.

AA – L2 – Q1 – Professional Ethics and Code of Conduct for Auditors

Discuss the independence threat from an audit manager holding shares in Sycamore and required safeguards.

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Tag (SQ): Audit Team

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AA – L2 – Q16 – Planning an Audit

Explain the need for audit planning and its benefits per ISA 300. Outline steps to take before auditing a long-term limited company client. Explain how internal auditor's planning differs from external auditor's.

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AA – L2 – Q1 – Professional Ethics and Code of Conduct for Auditors

Discuss the independence threat from an audit manager holding shares in Sycamore and required safeguards.

You're reporting an error for "AA – L2 – Q1 – Professional Ethics and Code of Conduct for Auditors"

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