Ch. 3 - Client Acceptance

Question 1

CSQC stands for

Answer 1

Canadian Standards on Quality Control

Question 2

Things to consider when accepting or continuing with an engagement

Answer 2

1. The integrity of the owners and management
2. Does the engagement team have the required competence
3. can the firm and engagement team comply with relevant ethical requirements
4. whether significant matters have arisen since or during the prior year engagement

Question 3

Things to consider when assessing a client’s integrity

Answer 3

1. Reputation in the business community
2. clients attitude towards risk
3. cooperation in providing information
4. clients attitude towards audit fee
5. why is the client switching firms

Question 4

Procedures to assess integrity

Answer 4

1. communicate with previous auditor
2. communicate with independent third parties (lawyers, creditors)
3. perform a background check
4. obtain and scan prior financial statements

Question 5

Criteria for accepting a new engagement

Answer 5

1. is the financial reporting framework appropriate
2. Are there any independence prohibitions
3. can the practitioner mitigate or accept engagement risk factors
4. has clients mgmt accepted responsibilities in writing

Question 6

Purpose of an engagement letter

Answer 6

lay out the terms of the engagement, including:

1. objective and scope
2. responsibilities of the practitioner
3. responsibilities of management
4. identification of the applicable FR framework
5. reference to expected form and content of reports
6. basis for which fees are computed