ADMS 4551 Chapter 6: client acceptance

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raspberrymouse643

4 Nov 2018

School

York University

Department

Administrative Studies

Course

ADMS 4551

Professor

Larry Yarmolinsky

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Document Summary

Adms 4551 ch 6 client acceptance, planning, & materiality. If lawsuit between client & auditor discontinue audit threat ind: may stop due to excessive risk ex. Independence threat analysis 5 threats then safeguards: decline if safeguards do not mitigate. If internal audit competence/integrity/objectivity can rely. Judgments made in light of circumstances surrounding entity & affected by size/nature of misstatement. Identify fs users & consider info in fs useful to them: overall materiality depends on needs/expectations of users, 3 steps in determining overall materiality, select appropriate benchmark, determine % applied to selected benchmark. Justify choice (explain judgment: select the benchmark, to select appropriate benchmark auditors must understand users of fs, benchmark primary concerns of fs users, cas 320 factors that affect selection of appropriate benchmark. Low tolerance if meant for assessing price / higher tolerance if assessing performance: result variation in % & appropriate base. If set too high might not perform sufficient procedures to detect material misstatements.

Related Questions

Which of the following statements is most correct regarding the independent auditor's reliance on the tests of controls performed by the internal auditors to reduce their substantive testing?

1-The independent auditor must obtain assurance of the independence of the internal auditors but need not test their work.

2-It is not acceptable for the independent auditor to rely upon the work of the internal auditors.

3-There are no restrictions in relying upon the work of internal auditors.

4-The independent auditor must evaluate the competency and objectivity of the internal auditors and must test a sample of the work of the internal auditors in order to rely upon their work.

The term "materiality" as used in auditing is best described as the

1-substance of the auditing procedures.

2-amount of misstatement on the financial statements that would influence a decision maker.

3-underlying evidence upon which the audit opinion is based.

4-amount of material the auditor gathers as evidence to support the audit opinion.

Prior to accepting an audit client an auditor has a professional obligation to

1-contact the predecessor auditor.

2-perform preliminary analytical review procedures.