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1. i notice that in audit planning there should be audit procedures to be performed in addition to those required by ISA.
That means all the evidence that we suggest are those required in addition to ISA ?
if possible, where can i see those audit procedures required by ISA to perform by auditors.
2. June 2013 Spaniel (section B question), it seems that the tort of negligence was applied. However this “tort of negligence” is the liability to third parties where there’s no contractual relationship with the auditor isn’t ?
therefore, shouldn’t be a liability to the contract ? which arises from the contract law, so client can sue the auditor for breach of contract if the auditor delivers a negligently prepared auditor’s report. However, auditor can avoid this liability is they have complied with generally accepted auditing standards that they have not been negligent.
3. if the question were to comment on professional issue, can we write all the threats/ matters first and then safeguards at last ? ?
or is it better off to write individual threat/matter first and safeguard afterwards and write subsequent threat/matter4. In mgmt threat, how potential familiarity threat arises ?
if audit firm aligns views and interest to those as the mgmt, why this will lead to familiarity threat ? i don’t quite get this part.1. Can you give me an example? I don’t know what you mean. Audit procedures to obtain audit evidence are summed up by “AEIOU” (Chapter 13).
2. See Chapter 7 – if, as you say, an audit is conducted in accordance with ISAs, for example, the auditor will not be negligent and so not liable (in tort or contract). A third party can only bring a claim in tort (because there is no contract), but a company can (and will usually) bring a claim for both breach of contract and negligence. In cases of alleged negligence, the company would have to proved negligence to prove breach of contract.
3. Most answers seem to deal with safeguards after each issue – I think this is preferable as each issue is usually sufficiently different that the safeguards are not the same. If all the safeguards are shown at the end, they would need to be clearly matched against the issues to be awarded credit, they can’t just be lumped together.
4. “Management threat” is not a separate category in the Code, it describes the risk of assuming management responsibilities (i.e. undertaking work that involves making judgments and taking decisions that are properly the responsibility of management).
Familiarity threat is “the threat that due to a long or close relationship with a client
or employer, a professional accountant will be too sympathetic to their interests or
too accepting of their work”. So if an auditor were to prepare the financial statements, for example, on behalf of management – in whose interests would they appear to be acting? Management’s.
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