10 Questions
Which of the following is an example of an intimidation threat to a PAPP?
A firm being threatened with litigation by the client
Which of the following is a safeguard to mitigate threats to objectivity created by the profession?
Continuing professional development requirements
What is a potential consequence of a PAPP not establishing safeguards to mitigate intimidation threats?
Compromised objectivity
Which of the following is a characteristic of a safeguard in the work environment?
Varies depending on the circumstances
What is the primary purpose of professional standards?
To establish guidelines for professional conduct
Which of the following is an example of a safeguard created by legislation or regulation?
Corporate governance regulations
What is the primary objective of external review by a legally empowered third party?
To identify and mitigate threats to objectivity
Which of the following is a characteristic of intimidation threats?
Implicit or explicit pressure to compromise objectivity
What is the primary purpose of professional or regulatory monitoring and disciplinary procedures?
To ensure compliance with professional standards
Which of the following is a potential consequence of a PAPP not establishing safeguards to mitigate threats to objectivity?
All of the above
Study Notes
Work Environment Safeguards
- Firm-wide safeguards in the workplace environment include:
- Leadership stressing importance of compliance with fundamental principles
- Policies and procedures to implement and monitor quality control of engagements
- Documented policies regarding identification of threats to compliance
- Policies and procedures to monitor and manage reliance on revenue from a single client
- Using different partners and engagement teams for non-assurance services to assure clients
- Policies to prohibit inappropriate influence on engagement outcome
- Timely communication of policies and procedures to all partners and professional staff
- Designating a member of senior management to oversee quality control system
- Advising partners and professional staff of assurance clients and related entities
- Disciplinary mechanism to promote compliance
- Published policies to encourage and empower staff to communicate compliance concerns
- Engagement-specific safeguards in the work environment include:
- Having a PAPP review non-assurance work or advise as necessary
- Having a PAPP review assurance work or advise as necessary
- Consulting an independent third party, such as a committee of independent directors
- Discussing ethical issues with those charged with governance of the client
- Disclosing nature of services provided and extent of fees charged to governance
- Involving another firm to perform or re-perform part of the engagement
- Rotating senior assurance team personnel
The Qualities of an Auditor
- The nine qualities that should characterize an auditor:
- Accountability
- Integrity
- Objectivity and Independence
- Competence
- Rigour
- Judgement
- Clear, complete, and effective communication
- Association
- Providing Value
Multiple Choice Questions
- Elements of an assurance engagement:
- A three-party relationship
- Suitable criteria
Intimidation Threats
- Circumstances that create intimidation threats for a PAPP:
- Firm being threatened with dismissal from a client engagement
- Audit client indicating that it will not award a non-assurance contract to the firm
- Firm being threatened with litigation by the client
- Firm being pressured to reduce inappropriately the extent of work performed
- PAPP feeling pressured to agree with client employee due to expertise
- PAPP being informed that a planned promotion will not occur unless agreeing with an audit client's inappropriate accounting treatment
Safeguards to Mitigate Threats to Objectivity
- Safeguards to eliminate or reduce threats to an acceptable level:
- Safeguards created by the profession, legislation, or regulation
- Safeguards in the work environment
- Safeguards created by the profession, legislation, or regulation:
- Educational, training, and experience requirements for entry into the profession
- Continuing professional development requirements
- Corporate governance regulations
- Professional standards
- Professional or regulatory monitoring and disciplinary procedures
- External review by a legally empowered third party of the reports, returns, communications or information produced by a professional accountant
This quiz covers the firm-wide safeguards in place to ensure a safe and compliant work environment in accounting, including leadership, policies, and procedures. It tests knowledge on the implementation and monitoring of quality control and the management of reliance on revenue from a single client.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
