Podcast
Questions and Answers
Which of the following qualities is NOT considered essential for an auditor?
Which of the following qualities is NOT considered essential for an auditor?
- Competence
- Providing Value
- Objectivity and Independence
- Confidentiality (correct)
Which of the following is NOT an example of an engagement-specific safeguard in the work environment?
Which of the following is NOT an example of an engagement-specific safeguard in the work environment?
- Discussing ethical issues with those charged with governance of the client
- Performing an audit of an entity's financial statements without a signed engagement letter (correct)
- Having a PAPP who was not involved with the non-assurance service review the non-assurance work performed
- Involving another firm to perform or re-perform part of the engagement
Which of the following is an example of a published policy or procedure to encourage and empower staff to communicate compliance concerns?
Which of the following is an example of a published policy or procedure to encourage and empower staff to communicate compliance concerns?
- Having a PAPP who was not involved with the non-assurance service review the non-assurance work performed
- Establishing a whistleblower hotline (correct)
- Rotating senior assurance team personnel
- Disclosing to those charged with governance of the client the nature of services provided and extent of fees charged
Which of the following is a potential audit risk related to the quality of the audit?
Which of the following is a potential audit risk related to the quality of the audit?
Which of the following is an example of objectivity in an audit?
Which of the following is an example of objectivity in an audit?
Which of the following is NOT a consideration in determining materiality in an audit?
Which of the following is NOT a consideration in determining materiality in an audit?
Which of the following is an example of compliance with the fundamental principles of an audit?
Which of the following is an example of compliance with the fundamental principles of an audit?
Which of the following is a potential audit risk related to financial reporting?
Which of the following is a potential audit risk related to financial reporting?
Which of the following is an example of a safeguard to ensure the objectivity of an auditor?
Which of the following is an example of a safeguard to ensure the objectivity of an auditor?
Which of the following is NOT a consideration in determining the quality of an audit?
Which of the following is NOT a consideration in determining the quality of an audit?
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Study Notes
Work Environment Safeguards
- Firm-wide safeguards and engagement-specific safeguards are two types of work environment safeguards.
- Examples of firm-wide safeguards include:
- Leadership that stresses compliance with fundamental principles.
- Policies and procedures to implement and monitor quality control of engagements.
- Documented policies regarding identifying threats to compliance with fundamental principles.
- 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 an assurance client.
- Policies and procedures to prohibit inappropriate influence on the outcome of an engagement.
- Timely communication of firm policies and procedures to all partners and staff.
- Designating a senior manager to oversee the quality control system.
- Examples of engagement-specific safeguards include:
- Having a Professional Accountant in Public Practice (PAPP) review non-assurance work.
- Consulting an independent third party, such as a committee of independent directors or another PAPP.
- Discussing ethical issues with those charged with governance of the client.
Fundamental Principles of Professional Ethics
- Integrity implies fair dealing and truthfulness.
- An auditor should not be associated with reports or information that contains false or misleading statements.
- An auditor should take steps to disassociate from such information when aware of it.
Objectivity
- Objectivity means not allowing bias, conflict of interest, or undue influence to override professional or business judgments.
Professional Competence and Due Care
- Requires maintaining professional knowledge and skill to ensure competent services.
- Imposes obligations to:
- Maintain professional knowledge and skill.
- Act diligently in accordance with applicable technical and professional standards.
The Qualities of an Auditor
- The nine qualities that should characterize an auditor are:
- Accountability
- Integrity
- Objectivity and Independence
- Competence
- Rigour
- Judgement
- Clear, complete, and effective communication
- Association
- Providing Value
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