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Dear tutor,
In answer of Jansen & Co – Sep 2018 – 3b, it says “The audit manager should have been replaced earlier and that Watson Co has failed to provide adequate direction and supervision of the audit.” Watson Co is the client so how come the client directs or supervises audit team?
Secondly, can I mix up supervision, review and monitoring as they are similar terms in QUALITY CONTROL questions or I should be specific in exam? Although its difficult to be specific which one is affected.
Thanks,
1. It’s a typo – see https://opentuition.com/topic/watson-co-2
2. See our notes (Chapter 9) – monitoring is a control at firm (system) level. For an individual audit you should be referring to direction (what to do – FUTURE), supervision (what is being done – PRESENT) and review (what was done – PAST).
Ok. Thanks,
Monitoring is done through hot and cold reviews ?
All hot and cold reviews are Engagement Quality Control Review in fact?
See page 48:
“? Monitoring. To ensure that the quality control procedures adequate, relevant and are operating
properly.” This is ALL QC procedures (e.g. those relating to maintaining independence).Hot/cold reviews will apply only to individual and selected audits – monitoring controls apply to the firm’s system of controls. So monitoring aspect will be reviewing and confirming whether all audits that should have such reviews have, in fact, undergone an appropriate review.
An EQCR is necessarily “hot” – see the notes and my post on 24th January here https://opentuition.com/topic/independent-partner-review-3
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