Tuesday, August 20, 2019

SA 210,AGREEING THE TERMS OF AUDIT ENGAGEMENT


    STANDARD AUDIT 210
AGREEING THE TERMS OF AUDIT ENGAGEMENT
CONTEMPORARY AUDITING
    OBJECTIVE
    THE OBJECTIVE OF THE AUDITOR IS TO ACCEPT OR CONTINUE AN AUDIT AGREEMENT ONLY WHEN THE BASIS UPON WHICH IT IS TO BE PERFORMED HAS BEEN AGREED THROUGH:-
1.       ESTABLISHING WHETHER THE PRECONDITION FOR AN AUDIT ARE PRESENT AND
2.       CONFIRMING THAT THERE IS COMMON UNDERSTANDING BETWEEN AUDITOR AND MANAGEMENT AND WHERE APPROPRIATE THOSE CHARGED WITH GOVERNANCE OF THE TERMS OF THE AUDIT ENGAGEMENT.

    PRECONDITION FOR AN AUDIT
    THE AUDITOR SHALL :
                DETERMINE WHETHER THE FINANCIAL REPORTING FRAMEWORK TO BE APPLIED IN THE PREPARATION OF THE FINANCIAL STATEMENT IS ACCEPTABLE AND
                OBTAIN THE AGREEMENT OF MANAGEMENT THAT IT ACKNOWLEDGES AND UNDERSTAND ITS RESPONSIBILITY
1.       FOR THE PREPARATION OF THE FINANCIAL STATEMENT IN ACCORDANCE WITH THE APPLICABLE FINANCIAL REPORTING FRAMEWORK WHERE RELEVANT FOR THEIR FAIR PRESENTATION
2.       FOR SUCH INTERNAL CONTROL AS MANAGEMENT DETERMINES IS NECESSARY TO ENABLE THE PREPARATION OF THE FINANCIAL STATEMENTS THAT ARE FREE FROM MATERIAL MISSTATEMENTS WHETHER DUE TO FRAUD OR ERROR
    TO PROVIDE THE AUDITOR WITH:
1.       ACCESS TO ALL INFORMATION OF WHICH MANAGEMENT IS AWARE THAT IS RELEVANT TO THE PREPARATION OF THE FINANCIAL STATEMENTS SUCH AS RECORDS,DOCUMENTATION AND OTHER MATTERS
2.       ADDITIONAL INFORMATION THAT THE AUDITOR MAY REQUEST FROM MANAGEMENT FOR THE PURPOSE OF THE AUDIT
3.       UNRESTRICTED ACCESS TO PERSONS WITH IN THE ENTITY FROM WHOM THE AUDITOR DETERMINE IT NECESSARY TO OBTAIN AUDIT EVIDENCE
    LIMITATION ON SCOPE PRIOR TO AUDIT ENGAGEMENT ACCEPTANCE
1.       IF THE MANAGEMENT IMPOSES   LIMITATION ON THE SCOPE OF THE AUDITOR
2.       AUDITOR BELIEVE SUCH LIMITATION WILL RESULT IN AUDITOR DISCLAIMING AN OPINION ON THE FINANCIAL STATEMENTS,THE AUDITOR SHALL NOT ACCEPT SUCH A LIMITED ENGAGEMENT
    OTHER FACTORS AFFECTING AUDIT ENGAGEMENT ACCEPTANCE
    IF THE PRECONDITIONS FOR AN AUDIT IS NOT PRESENT,
1.       DISCUSS THE MATTER WITH THE MANAGEMENT
2.       UNLESS REQUIRED BY LAW OR REGULATIONS TO DO SO THE AUDITOR SHALL NOT ACCEPT  THE PROPOSED AUDIT ENGAGEMENT
    AGREEMENT ON AUDIT ENGAGEMENT TERMS
    AGREE WITH THE TERMS OF AUDIT ENGAGEMENT WITH MANAGEMENT OR THOSE CHARGED WITH GOVERNANCE
    AGREED TERMS RECORDED IN AUDIT ENGAGEMENT LETTER:
1.       THE OBJECTIVE AND SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENT
2.       THE RESPONSIBILITY OF THE AUDITOR
3.       THE RESPONSIBILITY OF THE MANAGEMENT
4.       IDENTIFICATION OF THE APPLICABLE FINANCIAL REPORTING FRAMEWORK
5.       EXPECTED FORM AND CONTENT OF ANY REPORT BY THE AUDITOR
6.       IF THE LAW OR REGULATION PRESCRIBE IN SUFFICIENT DETAIL THE TERMS OF THE AUDIT THE AUDITOR NEED NOT RECORD
    RECURRING AUDIT
1.       ASSESS WHETHER CIRCUMSTANCES REQUIRE THE TERMS OF THE AUDIT ENGAGEMENT TO BE REVISED
2.       WHETHER THERE IS NEED TO REMIND THE ENTITY OF THE EXISTING TERMS OF THE AUDIT ENGAGEMENT
    ACCEPTANCE OF A CHANGE IN THE TERMS OF THE AUDIT ENGAGEMENT
1.       ACCEPTING CHANGES IN TERMS OF AUDIT ENGAGEMENT WHEN THERE IS REASONABLE JUSTIFICATION FOR DOING IT
2.       IF PRIOR TO COMPLETING THE AUDIT ENGAGEMENT THE AUDITOR IS REQUESTED TO CHANGE THE AUDIT ENGAGEMENT THAT CONVEYS  A LOWER LEVEL OF ASSURANCE,THE AUDITOR SHALL DETERMINE WHETHER THERE IS REASONABLE JUSTIFICATION FOR DOING SO
3.       AUDITOR AND MANAGEMENT SHOULD AGREE ON RECORD THE NEW TERMS OF THE ENGAGEMENT LETTER OR OTHER SUITABLE FORM OF WRITTEN AGREEMENT
4.       ACCEPTANCE OF A CHANGE IN THE TERMS OF THE AUDIT ENGAGEMENT
5.       IF THE AUDITOR IS UNABLE TO AGREE TO A CHANGE IN THE TERMS OF THE ENGAGEMENT AND IS NOT PERMITTED BY THE MANAGEMENT TO CONTINUE THE ORIGINAL AUDIT ENGAGEMENT THE AUDITOR SHALL :-
6.       WITHDRAW FROM THE ENGAGEMENT AND
7.       DETERMINE WHETHER THERE IS ANY OBLIGATION EITHER CONTRACTUAL OR OTHERWISE TO REPORT THE CIRCUMSTANCES TO OTHER PART IS SUCH AS THOSE CHARGED WITH GOVERNANCE ,OWNERS AND REGULATORS.
    ADDITIONAL CONSIDERATIONS IN ENGAGEMENT ACCEPTANCE
1.       FINANCIAL REPORTING STANDARDS SUPPLEMENTED BY LAW OR REGULATION:
2.       DETERMINE WHETHER THERE  ARE ANY CONFLICT BETWEEN THE FINANCIAL REPORTING STANDARD AND THE ADDITIONAL REQUIREMENTS
3.       IF SUCH CONFLICTS EXIST,THE AUDITOR SHALL DISCUSS WITH THE MGMT THE NATURE OF THE ADDITIONAL REQUIREMENTS AND SHALL AGREE WHETHER :-
1.       ADDITIONAL REQUIREMENT CAN BE MET THROUGH ADDITIONAL DISCOURSES IN THE FINANCIAL STATEMENTS
2.       THE DESCRIPTION OF THE APPLICABLE FINANCIAL REPORTING FRAMEWORK IN THE FINANCIAL STATEMENTS CAN BE AMENDED ACCORDINGLY
3.       IF NEITHER OF THE ABOVE ACTION IS POSSIBLE,THE AUDITOR SHALL DETERMINE WHETHER IT WILL BE NECESSARY TO MODIFY THE AUDITOR’S OPINION
    FINANCIAL REPORTING FRAMEWORK BY LAW OR REGULATION– OTHER MATTERS AFFECTING ACCEPTANCE
    IF THE AUDITOR HAS DETERMINED THAT THE FINANCIAL REPORTING FRAMEWORK PRESCRIBED BY LAW OF REGULATIONS WOULD BE UNACCEPTABLE BUT FOR THE FACTS THAT IT IS PRESCRIBED BY LAW OR REGULATIONS,THE AUDITOR SHALL ACCEPT THE AUDIT ENGAGEMENT ONLY IF THE FOLLOWING CONDITIONS ARE PRESENT:
                MANAGEMENT AGREES TO PROVIDE ADDITIONAL DISCOURSES IN THE FINANCIAL STATEMENTS REQUIRED TO AVOID THE FINANCIAL STATEMENTS BEING MISLEADING
                RECOGNIZED IN THE TERMS OF THE AUDIT ENGAGEMENT THAT:-
  1. THE AUDITOR;S REPORTS ON THE FINANCIAL STATEMENTS WILL INCORPORATE ON EMPHASIS OF MATTER PARAGRAPH,DRAWING USER’S ATTENTION TO ADDITIONAL DISCLOSURES
  2. UNLESS THE AUDITOR IS REQUIRED BY LAW OR REGULATIONS TO EXPRESS THE AUDITOR’S OPINION ON THE FINANCIAL STATEMENTS BY USING THE PHRASES PRESENT FAIRLY IN ALL MATERIAL RESPECTS OR GIVE A TRUE AND FAIR VIEW IN ACCORDANCE WITH THE APPLICABLE REPORTING FRAMEWORK,THE AUDITOR’S OPINION ON THE FINANCIAL STATEMENT WILL NOT INCLUDE SUCH PHRASES
  3. IF THE CONDITIONS OUTLINED IN PARAGRAPH ABOVE ARE NOT PRESENT THE AUDITOR IS REQUIRED BY LAW OR REGULATIONS TO UNDERTAKE THE AUDIT ENGAGEMENT THE AUDITOR SHALL
  4. EVALUATE THE EFFECT OF THE MISLEADING NATURE OF THE FINANCIAL STATEMENTS ON THE AUDITOR'S REPORT
  5. INCLUDE APPROPRIATE REFERENCE TO THIS MATTER IN THE TERMS OF THE ENGAGEMENT
    AUDITOR’S REPORT PRESCRIBED BY LAW OR REGULATION
    IN SOME CASES.THE LAW OR REGULATIONS APPLICABLE TO ENTITY PRESCRIBES THE LAYOUT OF THE AUDITOR’S REPORT IN A FORM OR IN TERMS THAT ARE SIGNIFICANTLY DIFFERENT FROM THE REQUIREMENTS OF SA. THEN AUDITOR SHALL EVALUATE :
  1. WHETHER USERS MIGHT UNDERSTAND THE ASSURANCE OBTAINED FROM THE AUDIT OF THE FINANCIAL STATEMENT AND IF SO
  2. WHETHER ADDITIONAL EXPLANATION IN THE AUDITOR’S REPORT CAN MITIGATE MISUNDERSTANDING
3.       IF THE AUDITOR CONCLUDES THAT THE ADDITIONAL EXPLANATION IN THE AUDITOR’S REPORTS CAN NOT MITIGATE THE POSSIBLE MISUNDERSTANDING,THE AUDITOR SHALL NOT ACCEPT THE AUDIT ENGAGEMENT UNLESS REQUIRED BY LAW OR REGULATIONS TO DO SO



No comments:

Post a Comment