Question Tag: ISA 210

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  • 15 Marks

AAA – Nov 2022 – L3 – SC – Q5 – Audit Planning and Strategy

Discuss professional skepticism, benefits of audit planning, audit strategy, and audit stages.

At the weekly meeting of an audit firm, it was reported that a new audit client (Salisa Limited) has just been won. An implementation team has been constituted with a manager as the head. At the meeting of the implementation team, the manager stated that there is a need for the team to work on the audit planning strategy; the contents of which will form the audit planning memorandum that will be presented to the audit committee. He stated further that a professional clearance has to be sent to the former auditor after which, a background check will be performed on the directors and other principal officers of the company. It is also believed that for proper risk assessment, there is a need to understand the business operations of the company. He stated further that the audit will be structured into both interim and final audits.

An experienced member of the team also mentioned the need for the auditor to adopt an attitude of professional skepticism. He emphasized that planning the audit will involve the whole engagement team to establish an understanding of the terms of the engagement as required by ISA 210, which will help establish an overall strategy for the audit. Developing the audit plan will include the nature, timing, and extent of planned risk assessment procedures, further audit procedures, and documentation of the overall audit strategy.

Required:

a. Explain professional skepticism. (2 Marks)

b. State how adequate planning can benefit the audit team. (3 Marks)

c. Explain and illustrate what the establishment of the overall audit strategy involves. (3 Marks)

d. Discuss the elements of interim and final audits.

(7 Marks)

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  • 20 Marks

AA – Nov 2022 – L2 – Q3 – Terms of Audit Engagement

Covers engagement letters, contents, benefits, and ISA 210 requirements for auditor appointment.

ISA 210, Agreeing the Terms of Audit Engagements, requires that the auditor needs to agree the terms of audit engagement prior to commencement of work.

Required:
a. What is an engagement letter? (2 Marks)
b. Highlight EIGHT major items expected to be found in a typical audit engagement letter. (8 Marks)
c. State FIVE advantages of an engagement letter. (5 Marks)
d. State FIVE requirements of ISA 210 with respect to the preconditions for accepting appointment as an auditor. (5 Marks)

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  • 10 Marks

AA – Nov 2019 – L2 – Q5a – Planning and Approach for Audit and Assurance Engagements

Discusses the main actions to establish preconditions for an audit and outlines conditions for changing audit engagement terms.

You have been assigned as the training manager in your audit firm. The Partners of your firm tasked you to take the newly recruited trainees through ISA 210: Agreeing the Terms of Audit Engagement. This deals with the auditor’s responsibilities in agreeing the terms of the audit engagement with management and those charged with governance.

The ISA states that the auditor shall agree to the terms of the audit engagement with management or those charged with governance, as appropriate, and these terms can be recorded in an audit engagement letter or other suitable form of written agreement.

Required:
i) Describe the main actions an auditor should take in order to establish whether the preconditions for an audit are present. (6 marks)
ii) Outline when an auditor should change the terms of the audit engagement in relation to a recurring audit.

(4 marks)

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  • 5 Marks

AA – Nov 2020 – L2 – Q5b – Regulatory Framework and Audit Responsibilities

List preconditions to assess before accepting an audit engagement.

The objective of the auditor per ISA 210: Agreeing the terms of audit engagements is to accept or continue an audit engagement only when the basis upon which it is to be performed has been agreed. One way to do this is to establish whether the preconditions for an audit are present.

Required:
What are the preconditions to be assessed?
(5 marks)

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  • 5 Marks

AA – Nov 2020 – L2 – Q5a – Regulatory Framework and Audit Responsibilities

Explain the purpose of an engagement letter and key information it should contain.

ISA 210: Agreeing the terms of audit engagements requires that auditors should issue a letter of engagement before commencement of the audit.

Required:
i) What is the purpose of an engagement letter?
(1 mark)

ii) Identify FOUR (4) important pieces of information that the engagement letter should contain.
(4 marks)

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  • 5 Marks

AA – Dec 2022 – L2 – Q2b – Planning and Approach for Audit and Assurance Engagements

Outlines the mandatory terms that must be included in an engagement letter according to ISA 210.

The nature of the relationship between the audit firm and the client is specified in an engagement letter, which helps reduce the possibility of misunderstanding the auditor’s position. This letter should be reviewed, updated, and signed on an annual basis.

Required:
Explain FOUR (4) mandatory terms contained in an engagement letter.

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  • 10 Marks

AA – May 2021 – L2 – Q5a – Planning and Approach for Audit and Assurance Engagements

State preconditions for audit engagements and circumstances under which an auditor may refuse an engagement

ISA 210 deals with the Auditor’s responsibility in agreeing to the terms of the audit engagement with management and, where appropriate, those charged with governance. This includes establishing certain preconditions for an audit and responsibilities that rest with management and, where appropriate, those charged with governance.

Required:
i) What THREE (3) preconditions must be established before an audit engagement is accepted? (6 marks)

ii) Under what TWO (2) circumstances will an auditor refuse an engagement? (4 marks)

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  • 10 Marks

AA – Nov 2021 – L2 – Q5a – Professional and Ethical Considerations, Engagement Letters

Explains four key terms to be included in an engagement letter in accordance with ISA 210.

SA 210: Agreeing to the terms of an engagement states that Engagement Letters are issued to serve as contracts between clients and auditors.

Required:
Justify FOUR (4) terms that could be included in an Engagement Letter in accordance with ISA 210.

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  • 10 Marks

AAA – Mar 2024 – L3 – Q1b – The regulatory environment, Practice management, The audit approach

Discussion of issues with an audit engagement letter for Kumanji Ltd in accordance with ISA 210.

Ayesu & Associates, a reputable auditing firm, was approached by Kumanji Ltd to conduct an annual financial audit for the fiscal year ending December 31, 2023. Below is the audit engagement letter.

Re: Engagement Letter for the Audit of Financial Statements of Kumanji Ltd

We are pleased to confirm the terms of our engagement for the audit of your financial statements for the year ended December 31, 2023. This letter will serve as our agreement with Kumanji Ltd and outlines the scope of our services, responsibilities, and fee structure. Please review this letter carefully and let us know if you have any questions or concerns.

Audit Period: The audit will cover the financial statements of Kumanji Ltd for the fiscal year beginning January 1, 2023, and ending on March 31, 2023.

Audit Fees: Our fee structure will be based on a fixed fee of GH¢5,000 for the audit, payable in two installments. The first installment of GH¢2,500 will be due at the commencement of the audit, and the remaining GH¢2,500 will be due upon completion of the audit.

Timeline for Reporting: We will deliver the audit report and financial statements to you within two months after the conclusion of our fieldwork.

Conflicts of Interest: We do not anticipate any conflicts of interest that may affect our independence or objectivity during the audit. If any conflicts arise, we will address them promptly.

Audit Scope: We will perform audit procedures in accordance with Generally Accepted Auditing Standards (GAAS) to obtain reasonable assurance about whether the financial statements are free from material misstatement. Specific audit procedures will be determined during the audit process.

Contingency Plan: We do not have a contingency plan in place for unexpected disruptions or events that may affect the audit process.

Please acknowledge your agreement to the terms outlined in this letter by signing and returning a copy to us at your earliest convenience. If you have any questions or require clarification on any aspect of this engagement, do not hesitate to contact us.

We look forward to working with you and providing high-quality audit services to Kumanji Ltd. Thank you for entrusting us with this important engagement.

Required:
In accordance with ISA 210: Agreeing the terms of audit engagements, discuss FIVE (5) issues with the engagement letter. (10 marks)

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  • 15 Marks

AAA – Nov 2022 – L3 – SC – Q5 – Audit Planning and Strategy

Discuss professional skepticism, benefits of audit planning, audit strategy, and audit stages.

At the weekly meeting of an audit firm, it was reported that a new audit client (Salisa Limited) has just been won. An implementation team has been constituted with a manager as the head. At the meeting of the implementation team, the manager stated that there is a need for the team to work on the audit planning strategy; the contents of which will form the audit planning memorandum that will be presented to the audit committee. He stated further that a professional clearance has to be sent to the former auditor after which, a background check will be performed on the directors and other principal officers of the company. It is also believed that for proper risk assessment, there is a need to understand the business operations of the company. He stated further that the audit will be structured into both interim and final audits.

An experienced member of the team also mentioned the need for the auditor to adopt an attitude of professional skepticism. He emphasized that planning the audit will involve the whole engagement team to establish an understanding of the terms of the engagement as required by ISA 210, which will help establish an overall strategy for the audit. Developing the audit plan will include the nature, timing, and extent of planned risk assessment procedures, further audit procedures, and documentation of the overall audit strategy.

Required:

a. Explain professional skepticism. (2 Marks)

b. State how adequate planning can benefit the audit team. (3 Marks)

c. Explain and illustrate what the establishment of the overall audit strategy involves. (3 Marks)

d. Discuss the elements of interim and final audits.

(7 Marks)

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  • 20 Marks

AA – Nov 2022 – L2 – Q3 – Terms of Audit Engagement

Covers engagement letters, contents, benefits, and ISA 210 requirements for auditor appointment.

ISA 210, Agreeing the Terms of Audit Engagements, requires that the auditor needs to agree the terms of audit engagement prior to commencement of work.

Required:
a. What is an engagement letter? (2 Marks)
b. Highlight EIGHT major items expected to be found in a typical audit engagement letter. (8 Marks)
c. State FIVE advantages of an engagement letter. (5 Marks)
d. State FIVE requirements of ISA 210 with respect to the preconditions for accepting appointment as an auditor. (5 Marks)

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  • 10 Marks

AA – Nov 2019 – L2 – Q5a – Planning and Approach for Audit and Assurance Engagements

Discusses the main actions to establish preconditions for an audit and outlines conditions for changing audit engagement terms.

You have been assigned as the training manager in your audit firm. The Partners of your firm tasked you to take the newly recruited trainees through ISA 210: Agreeing the Terms of Audit Engagement. This deals with the auditor’s responsibilities in agreeing the terms of the audit engagement with management and those charged with governance.

The ISA states that the auditor shall agree to the terms of the audit engagement with management or those charged with governance, as appropriate, and these terms can be recorded in an audit engagement letter or other suitable form of written agreement.

Required:
i) Describe the main actions an auditor should take in order to establish whether the preconditions for an audit are present. (6 marks)
ii) Outline when an auditor should change the terms of the audit engagement in relation to a recurring audit.

(4 marks)

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  • 5 Marks

AA – Nov 2020 – L2 – Q5b – Regulatory Framework and Audit Responsibilities

List preconditions to assess before accepting an audit engagement.

The objective of the auditor per ISA 210: Agreeing the terms of audit engagements is to accept or continue an audit engagement only when the basis upon which it is to be performed has been agreed. One way to do this is to establish whether the preconditions for an audit are present.

Required:
What are the preconditions to be assessed?
(5 marks)

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  • 5 Marks

AA – Nov 2020 – L2 – Q5a – Regulatory Framework and Audit Responsibilities

Explain the purpose of an engagement letter and key information it should contain.

ISA 210: Agreeing the terms of audit engagements requires that auditors should issue a letter of engagement before commencement of the audit.

Required:
i) What is the purpose of an engagement letter?
(1 mark)

ii) Identify FOUR (4) important pieces of information that the engagement letter should contain.
(4 marks)

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  • 5 Marks

AA – Dec 2022 – L2 – Q2b – Planning and Approach for Audit and Assurance Engagements

Outlines the mandatory terms that must be included in an engagement letter according to ISA 210.

The nature of the relationship between the audit firm and the client is specified in an engagement letter, which helps reduce the possibility of misunderstanding the auditor’s position. This letter should be reviewed, updated, and signed on an annual basis.

Required:
Explain FOUR (4) mandatory terms contained in an engagement letter.

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  • 10 Marks

AA – May 2021 – L2 – Q5a – Planning and Approach for Audit and Assurance Engagements

State preconditions for audit engagements and circumstances under which an auditor may refuse an engagement

ISA 210 deals with the Auditor’s responsibility in agreeing to the terms of the audit engagement with management and, where appropriate, those charged with governance. This includes establishing certain preconditions for an audit and responsibilities that rest with management and, where appropriate, those charged with governance.

Required:
i) What THREE (3) preconditions must be established before an audit engagement is accepted? (6 marks)

ii) Under what TWO (2) circumstances will an auditor refuse an engagement? (4 marks)

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You're reporting an error for "AA – May 2021 – L2 – Q5a – Planning and Approach for Audit and Assurance Engagements"

  • 10 Marks

AA – Nov 2021 – L2 – Q5a – Professional and Ethical Considerations, Engagement Letters

Explains four key terms to be included in an engagement letter in accordance with ISA 210.

SA 210: Agreeing to the terms of an engagement states that Engagement Letters are issued to serve as contracts between clients and auditors.

Required:
Justify FOUR (4) terms that could be included in an Engagement Letter in accordance with ISA 210.

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  • 10 Marks

AAA – Mar 2024 – L3 – Q1b – The regulatory environment, Practice management, The audit approach

Discussion of issues with an audit engagement letter for Kumanji Ltd in accordance with ISA 210.

Ayesu & Associates, a reputable auditing firm, was approached by Kumanji Ltd to conduct an annual financial audit for the fiscal year ending December 31, 2023. Below is the audit engagement letter.

Re: Engagement Letter for the Audit of Financial Statements of Kumanji Ltd

We are pleased to confirm the terms of our engagement for the audit of your financial statements for the year ended December 31, 2023. This letter will serve as our agreement with Kumanji Ltd and outlines the scope of our services, responsibilities, and fee structure. Please review this letter carefully and let us know if you have any questions or concerns.

Audit Period: The audit will cover the financial statements of Kumanji Ltd for the fiscal year beginning January 1, 2023, and ending on March 31, 2023.

Audit Fees: Our fee structure will be based on a fixed fee of GH¢5,000 for the audit, payable in two installments. The first installment of GH¢2,500 will be due at the commencement of the audit, and the remaining GH¢2,500 will be due upon completion of the audit.

Timeline for Reporting: We will deliver the audit report and financial statements to you within two months after the conclusion of our fieldwork.

Conflicts of Interest: We do not anticipate any conflicts of interest that may affect our independence or objectivity during the audit. If any conflicts arise, we will address them promptly.

Audit Scope: We will perform audit procedures in accordance with Generally Accepted Auditing Standards (GAAS) to obtain reasonable assurance about whether the financial statements are free from material misstatement. Specific audit procedures will be determined during the audit process.

Contingency Plan: We do not have a contingency plan in place for unexpected disruptions or events that may affect the audit process.

Please acknowledge your agreement to the terms outlined in this letter by signing and returning a copy to us at your earliest convenience. If you have any questions or require clarification on any aspect of this engagement, do not hesitate to contact us.

We look forward to working with you and providing high-quality audit services to Kumanji Ltd. Thank you for entrusting us with this important engagement.

Required:
In accordance with ISA 210: Agreeing the terms of audit engagements, discuss FIVE (5) issues with the engagement letter. (10 marks)

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