Which of the following factors most likely would cause an auditor to decline a new audit engagement? Failure of management to satisfy the preconditions for an audit.
When should an auditor reject engagement?
In relation to the final bullet point, if management impose a limitation on the scope of the auditor’s work in the terms of a proposed audit engagement, the auditor should decline the audit engagement if the limitation could result in the auditor having to disclaim the opinion on the financial statements.
What factors should an auditor consider prior to accepting an engagement?
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 …
Which of the following conditions most likely would pose the greatest risk and accepting a new audit engagement?
If there is a client imposed scope limitation, then there would be the greatest risk in accepting a new audit engagement for a CPA.
Why would an auditor perform engagement activities?
Pre-engagement activities take place before the auditor accepts or declines an audit engagement. These activities are performed when the auditor has to decide whether to accept a new client or to continue with the relationship with an existing client.
Why an auditor might not accept an audit engagement?
Audit engagement should not be accepted under following circumstances: Serious limitations on scope. Financial reporting framework is unacceptable. Management refuses to provide agreement that it acknowledges its responsibility as regards financial statements.
Why must an auditor consider managements integrity prior to accepting an audit engagement?
Prior to accepting a client, the auditor should investigate the client. The primary purpose is to evaluate the integrity of the client and the possibility of management fraud. The auditor should be especially concerned with the possibility of management fraud since it is difficult to uncover.
What should an auditor consider in developing the audit objectives of a particular engagement?
A1). When developing engagement objectives, internal auditors must consider the probability (often referred to as likelihood) of significant errors, fraud, noncompliance, and other exposures (Standard 2210. A2).
Which of the following best describes the primary purpose of audit procedures?
To detect errors or fraud.
Which of the following conditions identified during the audit increases the risk?
Which of the following conditions identified during the audit increases the risk of employee fraud? Inventory items of small size, but high value.
Which of the following circumstances most likely would cause an auditor to consider whether material?
Supporting records that should be readily available but are frequently not produced when requested would cause an auditor to consider whether material misstatements exist.