com 455
12) Leslee Supeene recently joined the firm of Moses, Denson, and Etchevery (MDE). She discovered that one of her closest friends is the controller in a client company of MDE. She is advising MDE of this information. Which threat to her independence will she be addressing?
A) self-interest threat
B) self-review threat
C) familiarity threat
D) advocacy threat
18) Professional scepticism requires:
A) that every management representation be substantiated with supporting documentation from an independent source.
B) that the auditor exercise more scepticism on newly acquired clients.
C) that members of the audit team think about and/or question evidence the reasonableness of evidence provided by a member of a client’s management or employees.
D) none of the above.
Problem 3:
(A) What section of the Assurance Handbook outlines the requirements of a Review Engagement?
(1 mark)
HANDBOOK OF INTERNATIONAL QUALITY CONTROL, AUDITING, REVIEW, OTHER
ASSURANCE, AND RELATED SERVICES
PRONOUNCEMENTS
2000–2699 INTERNATIONAL STANDARDS ON REVIEW ENGAGEMENTS (ISRES)
INTERNATIONAL STANDARD ON REVIEW ENGAGEMENTS 2400
(Previously ISA 910)
Problem 4 (5 marks)
The following items represent a series of unrelated procedures that an accountant may consider performing in an engagement to review or compile the financial statements of a non-public entity.
The procedures may apply to one, both or neither type of these engagements.
1. The accountant should establish an understanding with the entity regarding the nature and limitations of the services to be provided. – review of engagement
2. The accountant should perform a physical examination on inventory. -neither
3. The accountant should make enquiries concerning the actions taken by the Board of Directors’ meetings. – review of engagement
4. The accountant should obtain a level of knowledge of the accounting principles and practices of the entity’s industry. -both
A) self-interest threat
B) self-review threat
C) familiarity threat
D) advocacy threat
18) Professional scepticism requires:
A) that every management representation be substantiated with supporting documentation from an independent source.
B) that the auditor exercise more scepticism on newly acquired clients.
C) that members of the audit team think about and/or question evidence the reasonableness of evidence provided by a member of a client’s management or employees.
D) none of the above.
Problem 3:
(A) What section of the Assurance Handbook outlines the requirements of a Review Engagement?
(1 mark)
HANDBOOK OF INTERNATIONAL QUALITY CONTROL, AUDITING, REVIEW, OTHER
ASSURANCE, AND RELATED SERVICES
PRONOUNCEMENTS
2000–2699 INTERNATIONAL STANDARDS ON REVIEW ENGAGEMENTS (ISRES)
INTERNATIONAL STANDARD ON REVIEW ENGAGEMENTS 2400
(Previously ISA 910)
Problem 4 (5 marks)
The following items represent a series of unrelated procedures that an accountant may consider performing in an engagement to review or compile the financial statements of a non-public entity.
The procedures may apply to one, both or neither type of these engagements.
1. The accountant should establish an understanding with the entity regarding the nature and limitations of the services to be provided. – review of engagement
2. The accountant should perform a physical examination on inventory. -neither
3. The accountant should make enquiries concerning the actions taken by the Board of Directors’ meetings. – review of engagement
4. The accountant should obtain a level of knowledge of the accounting principles and practices of the entity’s industry. -both