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Hi Mike,
First of all i would like to say thanks for solving our issues.
My questions are
PLANNING :
In a broader perspective , what exactly do we need to do if we have any sort of planning question ?
I mean what is PRE PLANNING CONSIDERATIONS and POST ACCEPTANCE ( PLANNING ) CONSIDERATIONS ?I am quite confused as we consider locations , skills and after all that these factor becomes the base for fee calc. Is it audit stratgy ? ( and we do it before starting audit as part of sending tender in which u quote fee ? Or we do it POST ACCEPTANCE ? ) audit plan i think is more like selecting audit approach , nature and timing of procedures related to risk , communications and all that .
RISK :
Please provide example of what wordings to be used while discussing business risk and ROMM ? And how to answer if question is identify both business and ROMM in a single requirement ?ETHICS :
And to what extent Familarity threat is related to Intimidation Threat ?Firstly, where have you seen these requirements for pre-planning considerations and post-acceptance planning? And if they are in a past exam question, what’s the problem with reading the suggested printed solutions?
Secondly “And how to answer if question is identify both business and ROMM in a single requirement ?” The use of the word “and” in front of ROMM suggests that, although the examiner has included the two within one sentence, there are in fact two separate questions here.
I’m not going to propose that the two risks are not “inextricably intertwined (quote from a recent article in Student Accountant! Why the authors of these articles cannot use words which are reasonably likely to be understood by all from whatever country they originate defeats me – I get SO frustrated!)
In fact, business risks COULD lead to risk of material misstatement but, equally, a business risk may have NO implications for assessment of risk of material misstatement
Do I want to tie familiarity threat to intimidation? Not really. Unless you are so “close” to the client as a result of a prolonged period of tenure of office that you really, really, really don’t want to lose the client. And the client has worked that out, so then uses this burning desire for the auditor to remain in office as a threat to rotate them off the job
Maybe that’s the connection
Thanks Mike.
Pre planning and post acceptance planning is just to clear what exactly we do before accepting client ? No past paper question.
If we consider locations , required skills , resources and fee in audit strategy which we do after appointed as an auditor , then what we do at the time of Tender? And when we do client screening ?
Suppose Client A sends oit tender notice .. Many firms will try to be appointed for that client. What audit firm will do from scratch till the end of intial planning because i know plan keep change during the audit.
I know it can take much of ur time to answer . But PLEASE answer me in detail 🙁
Dangerous to combine as one the concepts of independence and objectivity. Independence suggests free from any matters which threaten unbiased opinion whereas objectivity suggests free from any pre-conceptions about a client / prospective client.
They are two separate concepts within ethics and should be used by you in an exam situation to make two separate points
muneeb – I can only think that pre-planning is client screening – do you really want this client, can we make a profit, do we have the staff availability, do we have the competences
Not sure if that’s going to keep you satisfied but I’m struggling to remember a past exam question where such a distinction was appropriate
Thanks for the reply
Mike can u please answer , how audit firms responds to the audit tender notice?
I mean what do they send as in reply to tender to get the client? Contents?
It’s more often than not a proposal that will then lead to a “beauty parade”, the purpose of which is to allow the client to try to establish which firm of auditors is likely to be most easily / comfortably worked with. Comes down to personal chemistry!
Cost is also nowadays a factor as the European economies struggle to get themselves out of the fiscal hole they fell into 4 years ago
As for tender documentation, whatever is necessary to secure an interview.
Proving that you have understood the clients’ needs and how you intend to satisfy them
History about the firm and its policies
CVs of the staff and senior personnelAs an audit firm, you’re trying to attract business. I don’t particularly wish to draw a parallel with “the oldest profession” but that’s what you’re doing – selling a service and, to be successful at it, you need to make yourself look as attractive as possible to potential users f the service that you’re offering.
In fact, the more I write, the easier it is to see the parallels!
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