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Post-Test L2 The Professional Standards (GAAS)

1. Policies and procedures should be established for deciding whether to accept or continue client relationships to minimize the likelihood of associating with clients whose management lacks integrity. Careful vetting of clients is important to protect an auditor's reputation and the public trust. 2. Differences of opinion are normally resolved through discussion, research, and consultation. The engagement leader typically resolves differences and may consult others. Unresolved issues are documented and the engagement report is not dated until differences are resolved. 3. Effective consultation involves discussion with those having specialized expertise, both within and outside the firm. Consultations should provide all relevant facts to enable informed advice and be appropriately documented. Formal consultations require documentation and include matters required

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Shaira Untalan
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38 views

Post-Test L2 The Professional Standards (GAAS)

1. Policies and procedures should be established for deciding whether to accept or continue client relationships to minimize the likelihood of associating with clients whose management lacks integrity. Careful vetting of clients is important to protect an auditor's reputation and the public trust. 2. Differences of opinion are normally resolved through discussion, research, and consultation. The engagement leader typically resolves differences and may consult others. Unresolved issues are documented and the engagement report is not dated until differences are resolved. 3. Effective consultation involves discussion with those having specialized expertise, both within and outside the firm. Consultations should provide all relevant facts to enable informed advice and be appropriately documented. Formal consultations require documentation and include matters required

Uploaded by

Shaira Untalan
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Untalan, Shaira Coleen DC.

BSA 3A

Post-Test L2
The Professional Standards (GAAS)
1. What is the importance of having a policy or checklists in accepting and/or
continuing the client relationship?

Policies and procedures should be established for deciding whether to accept or


continue a client relationship and whether to perform a specific engagement for that
client. Such policies and procedures should provide the firm with reasonable
assurance that the likelihood of association with a client whose management lacks
integrity is minimized. Establishing such policies and procedures does not imply that
a firm vouches for the integrity or reliability of a client, nor does it imply that a firm
has a duty to any person or entity but itself with respect to the acceptance, rejection,
or retention of clients. However, prudence suggests that a firm be selective in
determining its client relationships and the professional services it will provide.

Auditors bear many responsibilities to their clients, but they also have a duty to
uphold the public trust. The negative actions of clients can sometimes rebound on
auditors, damaging that reputation; preventing this means carefully vetting clients and
their activities at every stage of an engagement. Auditor shall be knowledgeable
about the several professionals on proper practices for client acceptance, continuance,
and—when necessary—disengagement.

2. What is the best option for differences in opinion between and among auditors and
quality control reviewers?

Normally, disagreements are resolved directly. This may include discussion, research,
and consultation with other knowledgeable parties. Most disagreements arise from
simple miscommunications that can be quickly rectified. The engagement leader
typically resolves differences of opinion within the team or with parties consulted
(e.g., internal specialists).

If a difference of opinion arises within the engagement team or with those consulted,
team members first discuss the matter with a senior team member and/or the
engagement leader. The engagement leader may choose to seek advice from others in
the Office such as other functional area specialists. When applicable, the quality
reviewer may be consulted; however, this consultation cannot compromise the quality
reviewer's ability to perform his or her role and to make objective evaluations.
If there is still a difference of opinion, the engagement leader documents the issue
giving rise to the difference of opinion and the opposing positions, including their
rationale. The issue will then move into Step 2—Arbitration, and the engagement
report will not be dated until all differences of opinion have been resolved.

3. How will you effect the consultation policies of the CPA firm? To what level of
consultation is most appropriate?

Consultation includes discussion at the appropriate professional level, with


individuals within or outside the firm who have specialized expertise. Effective
consultation on significant technical, ethical and other matters within the firm or,
where applicable, outside the firm can be achieved when those consulted: are given
all the relevant facts that will enable them to provide informed advice; and have
appropriate knowledge, seniority and experience, and when conclusions resulting
from consultations are appropriately documented and implemented. A consultation
(which may also be referred to as a formal consultation) is a discussion in which the
engagement team wants to obtain an objective view or receive guidance regarding a
specific set of facts and circumstances. A formal consultation includes any
consultation that an engagement team wants to reference in support of the audit
opinion or report. Formal consultations also include those matters that require
consultation under OAG policy. In addition, an engagement leader may designate any
other matter as a formal consultation and follow the consultation and documentation
protocols for a formal consultation.

4. What is the importance of having a continuing professional education for auditors of


the CPA firm?

Continuing professional education is required for CPAs to maintain their professional


competence and provide quality professional services. CPAs are responsible for
complying with all applicable CPE requirements, rules and regulations of state boards
of accountancy, as well as those of membership associations and other professional
organizations. In order to advance in your level of knowledge within any career, it is
necessary to invest in learning opportunities and to expand your professional network.
This can be accomplished through avenues such as training and conferences. Most
accountants are committed to ongoing training and updates due to the dynamic nature
of their profession, changing laws and regulations, to maintain a competitive
advantage, and to provide accurate information and adequate services. Failure to
provide accurate information can be costly for large businesses. The public is also
provided some protection from accountants that would otherwise fail to maintain
knowledge of the changing laws.

5. In relation to monitoring, how and who will monitor the progress of the audit?
A firm shall establish a monitoring process designed to provide it with reasonable
assurance that the policies
and procedures relating to the system of quality control are relevant, adequate, and
operating effectively. This
process shall:

a. Include an ongoing consideration and evaluation of the firm’s system of quality


control, including, on a cyclical
basis, inspection of at least one completed engagement for each engagement partner;
b. Require responsibility for the monitoring process to be assigned to a partner or
partners or other persons with
sufficient and appropriate experience and authority in the firm to assume that
responsibility; and
c. Require that those performing the engagement or the engagement quality control
review are not involved in
inspecting the engagements.

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