Professional ethics and the new audit engagements 1 / 10

Professional ethics and the new audit engagements

Auditors may advertise their services.

However,  adverts should not bring the ACCA into disrepute, discredit the services of others, be misleading, or fall short of regulatory or legislative requirements.

An auditor is required under ISA 315 to gain an understanding of their client.

Auditors should screen clients to ensure they are not high risk.

Questions to ask will be:

  1. Is the client involved in any fraudulent/illegal activities?

    What is the nature of the industry in which they are involved – is it depressed?

    Has the client had a history of changing auditor regularly or had qualified audit reports in the past?

    Do client directors understand their role and are they able to carry it out?

  2. Are management trustworthy?

    The risk to the auditor is ‘reputation risk’ i.e. that they will be associated with a poorly regarded client.

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