The tax and audit season is now upon us with many preparing for the January madness for self-assessment tax returns and gearing up for the December year ends, says Steve Collings.
We’ve now (more or less) gone first cycle with the clarified International Standards on Auditing (ISAs) and feedback from practitioners is that they are generally coping well with the new regime. With the planning about to start for December year ends, it seems sensible to offer some quick recaps relating to the new auditing regime to ensure that practitioners are complying with the new requirements. This article will not go into every single ‘new’ aspect of the clarified ISAs but aims to offer some guidance to practitioners on the more critical parts which might affect an SME audit particularly as some practitioners dealing with SME clients may only have one or two audit clients.
All engagement letters should have been re-issued to clients to comply with the provisions in ISA 210 Agreeing the Terms of Audit Engagement. The engagement letters need to be re-issued following the requirement in the clarified ISA 210 for the preconditions of an audit to be present prior to accepting appointment as auditor. The auditor must also assess whether the financial reporting framework to be applied is acceptable, and in the UK the framework will either be UK GAAP or EU-adopted IFRS.
The preconditions of an audit (all of which must be present) are as follows: