8/2/2019 ACCA P7 - Appointment

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APPOINTMENT

***Independence and Code of Ethics

Fundamental principles (CIO, PP)

Confidentiality

Integrity

Objectivity

Professional Competence and Due Care

Professional Behaviour

Ethical Threats (SIA, FS)

Self-Review

I nt im id at io n D et er re d f ro m a ct in g o bj ec ti ve ly

Advocacy

Familiarity

Sympathetic

Audit client familiar with audit proce

Self-Interest

Financial Audit fe

Personal Family m

Independence Rules

Non-audit ser vic e Prohibited if

Li

Va

Co

Re

Fee

Dependent

Overdue

Contingent

Lowballing

Close relationship with client

Other situations

Gift/hospitality

Perceived/threatened litigation

Engagement Letter

Preconditions for Audit

Correct FR framework

Mgmt agrees to be responsible

For FS prepared using appropriate FR framework

For IC

Provide auditor

Access to all info

Additional info needed

Unrestricted access to persons for evidence

If not met, don't acceptUnless law/regulation

Purpose

Acceptance

Objective and scope

Auditor's responsibilities

Report to be issued

Content

Objective

Mgmt's responsibility

Report form

Scope of audit using SSAs and CA

Inherent limitation of audit (can't discover all

material errors)

Provide access to auditor to relevant records

Planning the audit

Mgmt representation letter required

Request client confirmation of terms

Fee calculation and billing arrangements

TimingPrior to commencing audit

Client refuses to sign

Discuss why with mgmt and explain need

If still refuse, co nsider withdrawing

Matters to Consider (FOCC, IRR)

Fee

High enough

to cover cost and risk

Other Services

Competence and Due Care

Expertise needed

Sufcient time

Conflict Of Interests

Competing with firm

Direct competitor of existing client

Direct conflict with existing client (lawsuit)

I nd ep en de nc e R el at io ns hi ps o r s it ua ti on s

Risk

Professional Clearance Procedure

M ana ge me nt i nte gr it y Op in io n sho ppi ng

Resource

Timing

Size

Professional Clearance Procedure

Purpose

Aware of any matter

why shouldn't accept engagement

Steps

Approval to communicate with existing auditor

Permission refused: decline appointment

Permission granted: write to existing auditor

Evaluate reply: can still accept despite problems

Decide and inform entity of decision to accept/

reject appointment

No response from existing auditor: try othermeans of communication

Still no reply: send final letter to existing auditor

informing of decision to accept appointment

If didn't bother to respond

Lodge complaint with professional body