What are the procedures to be undertaken before auditor accepts an appointment?

1. Accepting audit appointments:* Appointment ethics:Before accepting nominations:The nominee auditors must carry out the following procedures:Ensure professionally qualifiedto actConsider whether disqualified on legal or ethical groundsEnsure existing resourcesadequate (competence- seedetails later)Consider available time , staff and technical expertiseObtain references (clientscreening- see details later)Make independent enquires if directors not personally knownCommunicate with presentauditorsEnquire whether there are reasons / circumstances behind thechange which the new auditors ought to know, also courtesy.- The present and proposed auditor must communicate withother prior to the audit being accepted.- The client must be asked to give permission forcommunication to occur. If the client refuses to givepermission, the proposed auditors must be decline nomination.- The auditors must ensure that there is no independence orother ethical problems likely to cause conflict with the ethicalcode.- New auditors should ensure that they have been appointed ina proper and legal manner.Procedure after accepting nomination:-Ensure that the outgoing auditors’ removal or resignation has been properlyconducted in accordance with national legislation. The new auditors should see avalid notice of the outgoing auditors’ resignation, or confirm that the outgoingauditors were properly removed.-Ensure that the new auditors’ appointment is valid. The new auditors shouldobtain a copy of the resolution passed at the general meeting appointment them asthe company’s auditors.-Set up and submit a letter of engagement to the director of the company.2. Obtain understanding about the entity and knowledge of the business:The auditor’s understanding of the entity and its environment consists of anunderstanding of the followingaspects:a) Industry, regulatory and other External Factors, including the ApplicableFinancial Reporting Framework

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External audits are an invaluable tool for companies.
2) Relationship
3) Reputation
4) Audit approach
5) Transparency
6) Expertise
What are the procedures to be undertaken before audit accepts an appointment?
What are the procedures to be undertaken before an auditor accepts appointment of a potential audit client?
What should auditor consider before accepting the appointment?
What are five procedures an auditor should perform in determining whether to accept a client?

The auditor should obtain information about these. Such knowledge includes informationaboutcompetitors, suppliers, customers, technological developments, the regulatoryenvironment, legal andpolitical environment and the environmental requirementsaffecting the industry and the entity. The auditorshould also consider general economicconditions.Examples of matters an auditor may consider include the following:•Industry conditions•Regulatory environment•Other external factors currently affecting the entity’s business.b) Nature of the EntityThe nature of an entity refers to the entity’s operations, its ownership and governance, thetypes ofinvestments that it is making and plans to make, the way that the entity isstructured and how it is financed.An understanding of the nature of an entity enables theauditor to understand the classes of transactions,account balances, and disclosures to beexpected in the financial statements.The auditor should obtain an understanding of the

Before the audit begins, the auditor performs pre-engagement acceptance or continuance procedures.This includes:

an independence assessment;
a pre-engagement assessment; and
communications with the previous auditor (if applicable).

Throughout this process, you can expect:

a letter that communicates the auditor’s independence and compliance with relevant professional standards; and
disclosure of all relationships between the auditor and the entity and its related entities that may affect the auditor’s independence.

Once the pre-engagement assessment is complete, the auditor issues an Engagement Letter with:

engagement objectives, scope and limitations;
management's responsibilities;
responsibility for adjustments;
the auditor's responsibilities; and
other matters, such as fees.

An independent audit builds public confidence towards the integrity of financial statements, and in nurturing the right corporate behaviour of SMEs in general.

External audits are an invaluable tool for companies.

Apart from the relevant legal obligations, and commitments to ensure tax compliance, an audit can bring financial discipline to your business. An external audit also enhances credibility to the financial statements of SMEs and provides a greater level of assurance to banks when assessing applications for credit facilities. Finally, an independent audit builds public confidence towards the integrity of financial statements, and in nurturing the right corporate behaviour of SMEs in general.

So how do you go about making sure that you get the right firm to take on this important task?

1) Cost

It is understandable that cost would be considered an important factor when choosing an auditor; but cost should not be the only, or indeed, principal factor. For all kinds of companies, including SMEs, audit failure is a serious matter, with the repercussions potentially affecting business, brand, and value.

2) Relationship

Getting to know a potential auditor well before entering into the relationship is essential—it is a window into how the relationship will hold up under stress (e.g. during the audit). If you have a good working relationship with the engagement partner, the audit will probably be smoother. The staff used in the audit will also be critical, and whether a firm ensures that on-job auditors are qualified and experienced is another factor to consider.

3) Reputation

Having confidence in the people who will be carrying out your company’s audit should, therefore, be at the top of your list of selection criteria. Reputation is clearly a key initial indicator. However, keep in mind that the person who has secured the service is usually not the one who performs the work. In this case, it may make sense to meet the people who will be responsible for managing and conducting the audit – rather than just the partner in charge of securing new clients (including your business). Find out more about their strengths and potential weaknesses. Will their skills and personalities integrate efficiently with those of your financial or management team? Are these people you feel comfortable working with? Do you feel you can trust them? Can they guarantee that they have the capacity to handle your audit within the timeframe and deadlines you require? If the answer is ‘no’, then this firm may not be the right one for you.

You need to feel confident that the audit partner you have in front of you is showing a genuine understanding of your business and industry. Are the questions being asked generic? Are they relevant to the size of your firm, the industry you work in, and the way you operate your business?

4) Audit approach

Without being too technical, it is also worth asking the auditor about their audit approach. Does the audit firm embrace technology and have tools to increase audit efficiency and reduce audit cost? How does the auditor assess the internal control framework and what reliance will be placed on the strength of the internal control environment? How does this reliance impact the audit fieldwork testing? Does the audit firm have the expertise and technical resource to audit environments that are highly reliant on IT systems? What type of feedback does the audit firm provide to its clients on any weaknesses that it encounters and does it provide recommendations related thereto?

5) Transparency

When sourcing your future auditor, you should also analyse how the prospective audit partner tackles questions relating to openness and transparency, especially when it comes to providing information about the audit process and quality control. Remember that you must have all the important information at your fingertips when you need it. Moreover, the right auditor should be able to communicate to you and your team with clarity so that you will know where and how to improve. The first test for the auditor would be to help your team understand what it needs to do to prepare for the audit.

6) Expertise

As we have already seen, your interview with prospective auditors and their answers to the right questions will point out the way for a successful selection. At this stage, it would also be worthwhile enquiring whether the audit firm has expertise and knowledge in non-audit areas, such as taxation, VAT and business advisory functions.

With the right auditor, your business can move forward, with more streamlined processes in place, complete compliance, and adherence to detail. You wouldn’t want to deliver anything less to your clients, so don’t settle for anything less for yourself, especially when the stakes are so high.

What are the procedures to be undertaken before audit accepts an appointment?

ensure that the legal requirements in relation to the removal of the previous auditors and the appointment of the firm have been met. carry out checks to ensure the firm can be independent, is competent to do this audit and has the necessary resources. assess whether this work is suitably low risk.

What are the procedures to be undertaken before an auditor accepts appointment of a potential audit client?

Before accepting an engagement to audit a new Service organization, the service auditor must perform their due diligence around the client acceptance process, anticipate acceptance issues, address the client risk, and perform risk acceptance procedures.

What should auditor consider before accepting the appointment?

Points to consider before accepting the Audit.

Background information..

Eligibility..

Management assessment..

Investigation of industry involvement and risk factor..

What are five procedures an auditor should perform in determining whether to accept a client?

The five issues are as follows:.

Management Integrity. Can the CPA rely on the management of the prospective client to provide meaningful disclosures and representations during the engagement?.

Relationships with Other Professionals. ... .

Risk of Association. ... .

Technical Competence. ... .

Professional Fees..