(a) Initial audit engagement
Generally up to 1½ marks for each point discussed, including:
– Communicate with the previous auditor, review their working papers
– Consider whether any previous auditor reports were modified
– Consider any matters which were raised when professional clearance was obtained
– Consider matters discussed with management during our firm’s appointment
– Need to develop thorough business understanding
– Risk of misstatement in opening balances/previously applied accounting policies
– Firm’s quality control procedures for new audit clients
– Need to use experienced audit team to reduce detection risk
Maximum marks 6