Describe the exemptions, where directors can appoint the auditors?
Before company's first period for appointing auditors, to fill a casual vacancy, following the period in which the company did not have an auditor.
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Whom may also appoint an auditor should neither the shareholders or directors?
Secretary of state (government) but this is rare.
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What ISA governs audit engagement?
ISA 210
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What is the primary purpose of the letter of engagement?
To define the auditors responsibilities. Minimise misunderstandings, in particular with new clients.
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What are some common misunderstandings of audit work?
Report to shareholders not directors, fraud detection primary responsibility of management/directors, true and fair view.
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What must audit firms ensure when providing 'other services'?
Charge separately for the audit & 'other services', adherence to independence guidelines, separate engagement letter stating 'other service' to be provided.
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When should the engagement letter be sent?
After verbally accepting appointment, BEFORE any audit work commences.
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Which ISA governs fraud?
ISA 240
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Define fraud?
The use of deception to obtain an unjust or illegal advantage or intentional misrepresentations.
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Who formed the 'conditions for fraud' triangle?
Donald Cressey.
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What are the conditions for fraud according to the triangle?
Perceived opportunity, pressure, rationalisation.
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Define error?
An unintentional mistake.
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Who has primary responsibility for the detection of fraud?
Management/directors.
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What are some of the characteristics of fraud?
Misstatements in the FT's, fraudulent reporting/misappropriation of assets, higher detection risk, management fraud.
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Other cards in this set
Card 2
Front
Whom may also appoint an auditor should neither the shareholders or directors?
Back
Secretary of state (government) but this is rare.
Card 3
Front
What ISA governs audit engagement?
Back
Card 4
Front
What is the primary purpose of the letter of engagement?
Back
Card 5
Front
What are some common misunderstandings of audit work?
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