ISQC 1 – NBC Institute

AAA – Nov 2014 – L3 – SB – Q2 – Quality Control in Audit Firms

Communication brief for quality control and audit working papers with a Q&A session.

Question

You have just joined the partnership of a small firm of Chartered Accountants, SMP Accountants & Partners, and have been asked to prepare a communication brief for distribution to all staff, which will then be followed by a presentation with a question-and-answer session. The communication brief required is regarding quality control procedures and audit working papers.

ISA 220 requires quality control procedures to be implemented at the engagement level, and ISQC 1 requires them to be implemented at the level of the audit firm. The partners are concerned that the firm’s quality control procedures may not be satisfactory as they have never been reviewed since they were first implemented five years ago. In addition, staff are able to read the policies and procedures in the staff manual, but there are currently no other ways in which the information is communicated to them.

Required:

a. Prepare a communication brief for distribution to all staff, which sets out: i. why quality control policies and procedures are necessary
ii. the areas that should be covered by quality control policies
iii. procedures that would be required to ensure that the policies are met.
(12 Marks)

b. Answer the following queries which were asked at the question-and-answer session:
i. What is the difference between a hot review and a cold review, and why are both necessary?
ii. Why is it so important that all audit reasons and justifications are documented in the working papers when it should be obvious from test results what the key issues are?
iii. Why do audit working papers have to be standardized since this inhibits auditors exercising their skills and experience in the most effective way?
(8 Marks)

(Total: 20 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Processes, Audit Working Papers, Documentation Standards, Engagement Reviews, ISA 220, ISQC 1, Quality control
Level: Level 3

Topic: Quality Control in Audit Firms
Series: NOV 2014

AAA – May 2021 – L3 – Q2 – Audit of Prospective Financial Information

Considerations before accepting an engagement to review prospective financial information, recommended procedures, and unmodified report extract.

Question

You are a partner in an audit firm – Dogba & Associates. One of your prospective clients is Edith Enterprises Nigeria Limited, a manufacturer of steel rods. Edith Enterprises is a private company set up by Madam Edith Adagba in 1985. Madam Adagba has since retired and handed over the running of the company to her daughter, Hauwa. Hauwa is determined to expand the operations of the company and has decided to go to the capital market for financing.

Hauwa has contacted Dogba & Associates and requested that the firm should act as reporting accountants by reviewing and reporting on its prospective financial information which has been prepared as part of the offer.

The audit firm has asked that you handle the engagement. In preparing for the engagement, you are required to do the following:

(a) Explain the matters, as required by ISQC 1 and ISAE 3400, which you would consider before accepting the engagement to review and report on the client’s prospective financial information. (6 Marks)
(b) Assuming you choose to accept the engagement, recommend the examination procedures to be performed in respect of the review of the prospective profit or loss information. (9 Marks)
(c) Prepare an extract of an unmodified report that the auditor could issue on the prospective financial information. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Engagement Acceptance, ISAE 3400, ISQC 1, Reporting Accountants, Review Procedures
Level: Level 3

Topic: Audit of Prospective Financial Information

AAA – May 2022 – L3 – Q1 – Quality Control in Audit Firms

Discuss ISQC 1 quality control requirements for leadership, ethics, engagements, human resources, monitoring, and documentation.

Question

A firm of Chartered Accountants has 25 partners and 100 audit staff. The firm provides a range of audit, assurance, tax and advisory/consultancy services. The firm has offices around the country and clients ranging from sole traders to limited liability companies.

The quality control partner has recently resigned. He has not yet been replaced as the Board of Partners of the firm has not been able to find a suitable replacement. Before his departure, the quality control partner was in the process of implementing a system of ethical compliance for assurance staff. Based on the foregoing, staff would be required to confirm in writing their compliance with the Code of Ethics, hence, implementation of this system is incomplete.

Oshodi Plc is one of the firm’s largest clients for which the firm provides audit, tax, and other advisory services. A new engagement partner has been assigned to the audit, as the previous partner in charge was the one who resigned. The fee for the audit work and other services has been set at the same level as the previous year in spite of the fact that additional work will need to be performed because Oshodi Plc has introduced a new computerized system. The starting date of the audit has been delayed due to problems with the new system. The management of Oshodi Plc was very insistent that the fee should not be increased as a result of this.

Required:

Discuss the requirements of ISQC 1: International Standard on Quality Control on overall audit firm level, which address each of the following:

a. Leadership responsibilities for quality (3 Marks)
b. Ethical requirements (5 Marks)
c. Acceptance and continuance of engagements (5 Marks)
d. Human resources (5 Marks)
e. Engagement performance (5 Marks)
f. Monitoring (4 Marks)
g. Documentation (3 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Quality Control, Engagement Performance, Ethical Compliance, ISQC 1
Level: Level 3

Topic: Quality Control in Audit Firms

AAA – May 2016 – L3 – Q2a – Practice management | Professional responsibility and liability

Advise on the matters to consider in relation to accepting a new audit client according to ISQC 1.

Question

Papa Nii and Papa Nana who just qualified as Professional Accountants have decided to enter into professional practice under a firm name Nana Nii & Associates. These two have been trainee accountants of an Audit and Assurance firm for three years before qualifying.

For their first engagement, the CEO of Mberdane Ltd. has nominated Nana Nii & Associates for appointment as auditors of his company though Mberdane Ltd was a former client of their former firm, Papa Nii and Papa Nana were never on the engagement team of Mberdane Ltd. As beginners, Papa Nii and Papa Nana have intended to follow best practices as required by ISQC 1 “Quality control for firms that perform audits and reviews of financial statements, and other assurance related services”. However, they are not clear on the matters that they have to consider in their acceptance decision according to the standard. They have approached you, a senior partner of their former firm, for advice.

Required:
Advise Papa Nii and Papa Nana on the matters that they may have to consider in relation to the acceptance decision on their nomination. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Client Acceptance, Competence, Ethical Requirements, Integrity, ISQC 1
Level: Level 3

Topic: Practice management, Professional responsibility and liability
Series: MAY 2016

AAA – May 2018 – L3 – Q2b – Practice management, Professional responsibility and liability

Discusses quality control standards for audit firms and the importance of procedures before accepting audit appointments.

Question

i) The quality control standard for firms, ISQC 1: Quality control for firms that perform audits and reviews of financial statements and other assurance services engagements sets out standards and guidance that helps firms to comply with ethical, professional and legal requirements in the performance of audit and other professional assignments for the public.
Required:
At the firm level, recommend the elements that should be included in an audit firm’s system of Quality Control. (5 marks)

ii) You are a partner in Nii and Nana Associates, a firm of Chartered Accountants. You have just been nominated for the audit of Wine and Dine Ltd., a catering company in the twin-city. The company and its officers are not known to the firm. The company has just been incorporated and has not previously had an audit. You are about ready to accept the nomination.
Required:
Discuss why it is important for auditors to carry out procedures before accepting nomination for appointments. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor appointment, Due diligence, Ethical considerations, ISQC 1, Quality control
Level: Level 3

Topic: Practice management, Professional responsibility and liability
Series: MAY 2018

AAA – Nov 2014 – L3 – SB – Q2 – Quality Control in Audit Firms

Communication brief for quality control and audit working papers with a Q&A session.

Question

Required:

(Total: 20 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Processes, Audit Working Papers, Documentation Standards, Engagement Reviews, ISA 220, ISQC 1, Quality control
Level: Level 3

Topic: Quality Control in Audit Firms
Series: NOV 2014

AAA – May 2021 – L3 – Q2 – Audit of Prospective Financial Information

Considerations before accepting an engagement to review prospective financial information, recommended procedures, and unmodified report extract.

Question

The audit firm has asked that you handle the engagement. In preparing for the engagement, you are required to do the following:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Engagement Acceptance, ISAE 3400, ISQC 1, Reporting Accountants, Review Procedures
Level: Level 3

Topic: Audit of Prospective Financial Information

AAA – May 2022 – L3 – Q1 – Quality Control in Audit Firms

Discuss ISQC 1 quality control requirements for leadership, ethics, engagements, human resources, monitoring, and documentation.

Question

Required:

Discuss the requirements of ISQC 1: International Standard on Quality Control on overall audit firm level, which address each of the following:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Quality Control, Engagement Performance, Ethical Compliance, ISQC 1
Level: Level 3

Topic: Quality Control in Audit Firms

AAA – May 2016 – L3 – Q2a – Practice management | Professional responsibility and liability

Advise on the matters to consider in relation to accepting a new audit client according to ISQC 1.

Question

Required:
Advise Papa Nii and Papa Nana on the matters that they may have to consider in relation to the acceptance decision on their nomination. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Client Acceptance, Competence, Ethical Requirements, Integrity, ISQC 1
Level: Level 3

Topic: Practice management, Professional responsibility and liability
Series: MAY 2016

AAA – May 2018 – L3 – Q2b – Practice management, Professional responsibility and liability

Discusses quality control standards for audit firms and the importance of procedures before accepting audit appointments.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor appointment, Due diligence, Ethical considerations, ISQC 1, Quality control
Level: Level 3

Topic: Practice management, Professional responsibility and liability
Series: MAY 2018

Question Tag: ISQC 1

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AAA – Nov 2014 – L3 – SB – Q2 – Quality Control in Audit Firms

Communication brief for quality control and audit working papers with a Q&A session.

Required:

AAA – May 2021 – L3 – Q2 – Audit of Prospective Financial Information

Considerations before accepting an engagement to review prospective financial information, recommended procedures, and unmodified report extract.

AAA – May 2022 – L3 – Q1 – Quality Control in Audit Firms

Discuss ISQC 1 quality control requirements for leadership, ethics, engagements, human resources, monitoring, and documentation.

AAA – May 2016 – L3 – Q2a – Practice management | Professional responsibility and liability

Advise on the matters to consider in relation to accepting a new audit client according to ISQC 1.

AAA – May 2018 – L3 – Q2b – Practice management, Professional responsibility and liability

Discusses quality control standards for audit firms and the importance of procedures before accepting audit appointments.

AAA – Nov 2014 – L3 – SB – Q2 – Quality Control in Audit Firms

Communication brief for quality control and audit working papers with a Q&A session.

Required:

AAA – May 2021 – L3 – Q2 – Audit of Prospective Financial Information

Considerations before accepting an engagement to review prospective financial information, recommended procedures, and unmodified report extract.

AAA – May 2022 – L3 – Q1 – Quality Control in Audit Firms

Discuss ISQC 1 quality control requirements for leadership, ethics, engagements, human resources, monitoring, and documentation.

AAA – May 2016 – L3 – Q2a – Practice management | Professional responsibility and liability

Advise on the matters to consider in relation to accepting a new audit client according to ISQC 1.

AAA – May 2018 – L3 – Q2b – Practice management, Professional responsibility and liability

Discusses quality control standards for audit firms and the importance of procedures before accepting audit appointments.

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AAA – Nov 2014 – L3 – SB – Q2 – Quality Control in Audit Firms

Communication brief for quality control and audit working papers with a Q&A session.

Required:

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AAA – May 2021 – L3 – Q2 – Audit of Prospective Financial Information

Considerations before accepting an engagement to review prospective financial information, recommended procedures, and unmodified report extract.

You're reporting an error for "AAA – May 2021 – L3 – Q2 – Audit of Prospective Financial Information"

AAA – May 2022 – L3 – Q1 – Quality Control in Audit Firms

Discuss ISQC 1 quality control requirements for leadership, ethics, engagements, human resources, monitoring, and documentation.

You're reporting an error for "AAA – May 2022 – L3 – Q1 – Quality Control in Audit Firms"

AAA – May 2016 – L3 – Q2a – Practice management | Professional responsibility and liability

Advise on the matters to consider in relation to accepting a new audit client according to ISQC 1.

You're reporting an error for "AAA – May 2016 – L3 – Q2a – Practice management | Professional responsibility and liability"

AAA – May 2018 – L3 – Q2b – Practice management, Professional responsibility and liability

Discusses quality control standards for audit firms and the importance of procedures before accepting audit appointments.

You're reporting an error for "AAA – May 2018 – L3 – Q2b – Practice management, Professional responsibility and liability"

AAA – Nov 2014 – L3 – SB – Q2 – Quality Control in Audit Firms

Communication brief for quality control and audit working papers with a Q&A session.

Required:

You're reporting an error for "AAA – Nov 2014 – L3 – SB – Q2 – Quality Control in Audit Firms"

AAA – May 2021 – L3 – Q2 – Audit of Prospective Financial Information

Considerations before accepting an engagement to review prospective financial information, recommended procedures, and unmodified report extract.

You're reporting an error for "AAA – May 2021 – L3 – Q2 – Audit of Prospective Financial Information"

AAA – May 2022 – L3 – Q1 – Quality Control in Audit Firms

Discuss ISQC 1 quality control requirements for leadership, ethics, engagements, human resources, monitoring, and documentation.

You're reporting an error for "AAA – May 2022 – L3 – Q1 – Quality Control in Audit Firms"

AAA – May 2016 – L3 – Q2a – Practice management | Professional responsibility and liability

Advise on the matters to consider in relation to accepting a new audit client according to ISQC 1.

You're reporting an error for "AAA – May 2016 – L3 – Q2a – Practice management | Professional responsibility and liability"

AAA – May 2018 – L3 – Q2b – Practice management, Professional responsibility and liability

Discusses quality control standards for audit firms and the importance of procedures before accepting audit appointments.

You're reporting an error for "AAA – May 2018 – L3 – Q2b – Practice management, Professional responsibility and liability"

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