Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 2, Problem 17DQP
To determine
Identify the applicable element of quality control for the given situation.
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For each of the following procedures taken from the quality control manual of a CPA firm, identify the applicable element of quality control from;
A. All potential new clients are reviewed before acceptance. The review includes consultation with predecessor auditors and background checks. All new clients are approved by the firm management committee, including assessing whether the firm has the technical competence to complete the engagement.
B. The partners accept responsibility for leading and promoting a quality assurance culture within the firm and for providing and maintaining a quality assurance manual and all other necessary practical aids and guidance to support engagement quality.
C. Each office of the firm shall be visited at least annually by review persons selected by the director of accounting and auditing. Procedures to be undertaken by the reviewers are illustrated by the office review program.
D. Appropriate accounting and auditing research requires adequate technical…
If you were Sarah, how would you respond to each question? For each of the following procedures taken from the quality control manual of a CPA firm, identify the applicable element of quality control from
A. All potential new clients are reviewed before acceptance. The review includes consultation with predecessor auditors and background checks. All new clients are approved by the firm management committee, including assessing whether the firm has the technical competence to complete the engagement.
B. The partners accept responsibility for leading and promoting a quality assurance culture within the firm and for providing and maintaining a quality assurance manual and all other necessary practical aids and guidance to support engagement quality.
C. Each office of the firm shall be visited at least annually by review persons selected by the director of accounting and auditing. Procedures to be undertaken by the reviewers are illustrated by the office review program.
D. Appropriate…
Each of the following quality control policies and procedures is typical of ones that can be found in public accounting firms’ systems of quality control. Identify each of them with one of the six elements of quality control identified by SQCS 8.a. Assign management responsibilities in such a manner that commercial considerations do not override the quality of work performed.b. Establish policies and procedures for resolving differences of opinion among firm personnel that arise during professional engagements.c. Develop policies and procedures to ensure that professionals are provided appropriate professional development opportunities.d. Review engagement documentation, reports, and the client’s financial statements.e. Develop effective performance evaluation, compensation, and advancement procedures.f. Identify circumstances and relationships that create threats to independence and take appropriate action to eliminate those threats or reduce them to an acceptable level.g. Identify…
Chapter 2 Solutions
Auditing And Assurance Services
Ch. 2 - Prob. 1RQCh. 2 - Prob. 2RQCh. 2 - Prob. 3RQCh. 2 - Prob. 4RQCh. 2 - Prob. 5RQCh. 2 - Prob. 6RQCh. 2 - Prob. 7RQCh. 2 - Prob. 8RQCh. 2 - Prob. 9RQCh. 2 - Prob. 10RQ
Ch. 2 - Prob. 11RQCh. 2 - State what is meant by the term peer review. What...Ch. 2 - Prob. 13.1MCQCh. 2 - Prob. 13.2MCQCh. 2 - Prob. 13.3MCQCh. 2 - Prob. 14.1MCQCh. 2 - Prob. 14.2MCQCh. 2 - Prob. 14.3MCQCh. 2 - Prob. 15.1MCQCh. 2 - Prob. 15.2MCQCh. 2 - Prob. 15.3MCQCh. 2 - Prob. 16DQPCh. 2 - Prob. 17DQP
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- In making a decision whether to accept or reject an engagement, an auditor should consider competence, independence, integrity of the prospective client's management and its ability to serve the client properly. Furthermore, the auditor is expected to perform the following (choose all the items that apply to the previous statement): * a. Obtain a preliminary knowledge of the client's business and industry to determine whether the client management has the degree of competence required by the engagement. b. Consider whether there are any threats to the firm's independence and objectivity, and if so, whether adequate safeguards can be established. c. Evaluate auditability. d. Investigation of the integrity of the client's management through inquiry to appropriate parties or communication with the successor auditor. e. Agree on the terms of the engagement and prepare a management representation letter. f. Evaluation of the firm's ability to serve the prospective client.arrow_forwardIn making a decision whether to accept or reject an engagement, an auditor should consider competence, independence, integrity of the prospective client's management and its ability to serve the client properly. Furthermore, the auditor is expected to perform the following (choose all the items that apply to the previous statement) You can have multiple answers from the choices below: a. Obtain a preliminary knowledge of the client's business and industry to determine whether the client management has the degree of competence required by the engagement. b. Consider whether there are any threats to the firm's independence and objectivity, and if so, whether adequate safeguards can be established. c. Evaluate auditability. d. Investigation of the integrity of the client's management through inquiry to appropriate parties or communication with the successor auditor. e. Agree on the terms of the engagement and prepare a management representation letter. f. Evaluation of the firm's ability…arrow_forwardThe following questions concern quality control standards. Choosethe best response.a. The nature and extent of a CPA firm’s quality control policies and procedures dependon The CPA The Nature of the Cost-benefitFirm’s Size CPA Firm’s Practice Considerations(1) Yes Yes Yes(2) Yes Yes No(3) Yes No Yes(4) No Yes Yesb. Which of the following are elements of a CPA firm’s quality control that should beconsidered in establishing its quality control policies and procedures?Human Resources Monitoring Engagement Performance(1) Yes Yes No(2) Yes Yes Yes(3) No Yes Yes(4) Yes No Yesc . One purpose of establishing quality control policies and procedures for decidingwhether to accept a new client is to(1) enable the CPA firm to attest to the reliability of the client.(2) satisfy the CPA firm’s duty to the public concerning the acceptance of new clients.(3) provide reasonable assurance that the integrity of the client is considered.(4) anticipate before performing any field work whether an unqualified…arrow_forward
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