Audit

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Q1 - What is the relationship between the risk assessment process and the collection of audit evidence?
The risk assessment process happens at the very beginning of the engagement and is to determine the level of risk present in the company. The risk assessment phase is when the auditor assess the client’s situation, conducts an independence threat analysis and decides whether to accept the client or not. The risk assessment is influenced by various factors such as the degree to which external users will rely on the audited statements, the company’s financial position (liquidity), the nature of operations, competence of management and their integiryt, if it is a first time client or not, etc. The riskier the company seems, the lower the engagement risk will be. The engagement risk is a measure of the auditor’s willingness to accept that the financial statements may be materially misstated even though a proper audit has been conducted. The more evidence he will need to gather and the more test he will perform to give an opinion. Therefore, depending on the risk assessment, the amount of work in the collection of evidence will vary largely. Q2- The following situations involve the provision of non-audit services. Indicate whether providing the service is a violation of the rules of professional conduct for PAs. Explain your answer. a)Providing bookkeeping services to a listed entity. The services were preapproved by the audit committee of the company. If the company is not your audit client and your are not involved in any engagement or review with this client, you may provide bookkeeping services to a listed company.

b)Providing internal audit services to a listed entity that is not an audit client. If you are not auditing this listed entity and they are not your client, you may provide internal audit services. c)Designing and implementing a financial information system for a private company. You can design and implement a information system for a...
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