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Audit Documentation and Client Evaluation

The document outlines various homework questions and answers related to auditing concepts, including auditor independence, corporate governance, and audit documentation. It emphasizes the importance of audit documentation for compliance and quality control, as well as factors affecting documentation judgment. Additionally, it provides a step-by-step approach for evaluating a potential client change in auditors.

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danielpint34
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26 views2 pages

Audit Documentation and Client Evaluation

The document outlines various homework questions and answers related to auditing concepts, including auditor independence, corporate governance, and audit documentation. It emphasizes the importance of audit documentation for compliance and quality control, as well as factors affecting documentation judgment. Additionally, it provides a step-by-step approach for evaluating a potential client change in auditors.

Uploaded by

danielpint34
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Chapter 3 Homework – Daniel Pinto

3.24 – C. The auditors’ judgment about their independence with regard to the
client.

3.26 – D. Excerpts of the corporate charter and bylaws.

3.29 – A. Schedules and analyses to be prepared by the client’s employees.

3.33 – D. Identifying related parties.

3.34 – D. All of the above.

3.36 – C. Cash, accounts receivable, and sales.

3.39 – D. Materiality is a matter of professional judgment.

3.45 – B. There will be a client-imposed scope limitation.

3.50 –
A. Purposes of Audit Documentation
a. Provides evidence of work performed
b. Demonstrates compliance with standards
c. Supports audit conclusions
d. Facilitates quality control reviews
e. Serves as reference for future audits
A. Records in Audit Documentation
a. Audit plans and risk assessments
b. Workpapers and testing procedures
c. Financial statements and supporting evidence
2. Factors Affecting Documentation Judgment
a. Entity complexity and risk level
b. Nature of audit procedures
c. Regulatory requirements
d. Significance of findings
3. Supporting GAAS Compliance
a. Procedures performed
b. Evidence obtained
c. Conclusions reached
d. Significant professional judgments
e. Resolution of inconsistencies
4. Effective Use of Prior-Year Plans
a. Review historical risks and findings
b. Update risk assessments
c. Leverage for team continuity
d. Address unresolved issues
e. Streamline processes where applicable

3.51 –
1. Ask CEO Larry Lancaster to authorize S&S to respond to AOW’s inquires

2. Contact S&S and inquire about


 Management’s integrity
 Any fraud or suspected fraud
 Noncompliance with laws and regulations
 Disagreements with management
 Reason for auditor change

3. Evaluate S&S response carefully

4. Request permission to review S&S’s prior year workpapers

5. Assess Lancaster's refusal to inform Smith & Smith about the change

6. Evaluate Lancaster's reasons for changing auditors, particularly his


view on audit detail and interference.

7. Document all communications and findings.

8. Make an informed decision about accepting the engagement based on


gathered information.

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