As audit firms get into gear to plan their December 2013 year-end audits, Steve Collings takes a look at 10 of the most common pitfalls flagged up by file reviewers and the professional bodies which auditors should try to avoid.
1. Engagement letter
One of the most frequent areas of concern relates to the letter of engagement between the auditor and the client. In more rare situations there is not a letter of engagement between the client and the auditor. The importance of the engagement letter cannot be over-emphasised - not only to comply with ISA 210 Agreeing the terms of audit engagements but also to ensure that there is clear understanding as to the responsibilities of the auditor and the responsibilities of management.
Audit firms must ensure that...
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- Revenue recognition
- Fraud
- Stock
- Written representations
- Going concern
- Documentation
- Two-way communication
- Subsequent events
- Audit report
Conclusion
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Steve Collings, FMAAT FCCA is the audit and technical partner at Leavitt Walmsley Associates Ltd where Steve trained and qualified.
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Auditing the Banks
It's a great pity that all of these protocols were not regularly applied by the auditors of our major banks prior to 2007.
Very good article and quite informative.
I encounter this every day, sometimes my colleagues feel all that documentation especially the 10 points mentioned here is a waste of time especially for small clients.
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