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1)In technical article, they wrote:
Many candidates fall into the trap of relying on ‘discussions with management/directors’ and ‘obtaining a written representation’. Candidates must appreciate that while discussion/inquiry is a valid audit procedure under ISA 500, Audit Evidence, such a procedure is always used in addition to other procedures – in other words, inquiry on its own will not generate sufficient appropriate audit evidence. Similarly ISA 580, Written Representations recognises that while written representations do provide necessary audit evidence, they do not provide sufficient appropriate audit evidence on their own about any of the matters with which they deal.What the implication is this paragraph, in my opinion, “discussions with management to ask them explain for the reason why they consider going concern is assumption is appropriate and information about future plan for business, say, if the entity expects to get loss in the next year, so they need to discuss more about this question to conclude whether or not the material uncertainty exist related to the condition or event may cast the significant doubt about going concern status is necessary, why they said “trap”in here” and should i use the procedure like that in exam?
2)The key audit partner include ” audit partner and engagement partner”, so what is the difference between them?, ( i google and find some info : engagement partner is audit firm and delegate power to audit partner….)
in BBp book they said the ” key audit partner shall rotate after 7 years and come available to come back after taking 2 years cooling off period.
in emilewoolf book they said : audit partner rotates in 7 years and engagement partner rotate in5 years.
if the engagement partner is audit firm and delegate power to audit partner is true , so one audit partner X can work for many engagement partner ,said, they work for audit firm A 5 years, carry out audit for client B for 5 years and after 5 years A rotate but X can continue to be audit partner for B for 2 years more? Is it right when i think like that?1 I think the pont is this. Assume that management has concluded that the company is a going concern. You , as auditor, would not simply accept this (otherwise why not simply ask if the FS give a trus and fair view). So you would ask to see the cash flow forecast )and other documents). You would look at the assumptions int the cash flow and have to decide if they were reasonable. If otu had doubts you ewould then ask management to justify the figure. You would still then skepitcally judge management’s justification. Audit is really all about collecting evidence. Management representatoins are probably the lowest form of evidence.
2 Think of a team of three partners. The ‘boss’ is the engagement partner [think, in charge of the engagement]. The others are mere audit partners, helpers. Many small audits only have an engagement partner. The key to rotatoin is to avoid familiarity threats: the big boss has to be changed more frequently than the helpers. We are talking here about rotating between clients, not the engagement partner/audit partner relatoinship.
Hi
I read the solution of the case Stone holiday, in explain how the audit function helps an entity deal with risk of fraud and error.they said:
-risk assessment -the internal audit function may carry out the risk of assessment to identify the main risk of fraud and error or may review the process carried out by the management.
-control recommendation: internal audit report may recommend controls to address the identified risk.
In text book they wrote, to ensure the objectivity of the internal auditor, they would not be involved in the assessment of risk and design the system.
So in term ” recommend ” , i think it can be acceptable, because it likes positive advice but carry out the risk assessment to identify risk is completely involved in the the risk assessment,.
Would you explain for me why they said like that?
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