Figure 3.3 on page 86 is very useful in helping people to understand how objectivity and independence
Question:
Figure 3.3 on page 86 is very useful in helping people to understand how objectivity and independence issues might be managed. Discuss.
Transcribed Image Text:
FIGURE 3.3 Audit firm's control environment and elements to enhance ethical behaviour in a firm providing audit and other assurance services Notes 1 Leadership of the Audit Firm creates the Firm's Control Environment. 2 Similarly, the Audited Entity creates the Entity's Control Environment. 3 The Ethics Partner helps to create and maintain the Firm's Control Environment. 4 An important element of the Entity's Control Environment comprises the role of Those Charged With Governance. 5 The Technical Advisory function gives advice on audit procedures and reporting to the Engagement team via the Engagement Partner. 6 The Engagement team comprises the Engagement Partner, Manager(s), Other Audit Staff, and Other Professional Staff (tax, IT, etc.) providing services to the team, and those who provide quality control or direct oversight of the audit, such as Ethics Partner and Engagement Quality Control Reviewer. 7 The Ethics Partner communicates possible breaches of the firm's policies and procedures to the Engagement Partner. 8 The Engagement Partner evaluates and reports back to the Ethics Partner and course of action is decided. 9 In the event of disagreement between the Engagement Partner and the Ethics Partner, the matter may be discussed with the Engagement Quality Control Reviewer and resolved. 10 The existence of potential threats to objectivity and independence, and safeguards communicated to Those Charged With Governance at the Audited Entity. 11 The Engagement Partner and the Engagement Quality Control Reviewer discuss significant matters arising from the audit. 12 These matters also communicated to Those Charged With Governance at the Audited Entity. 13 Any member of the Engagement team is empowered to communicate with the Ethics Partner. 14 The Engagement Partner prepares the draft Audit Report on the basis of conclusions of the Engagement team. 15 The Engagement Quality Control Reviewer reviews individual procedures and conclusions of the Engagement team. 16 The Engagement Quality Control Reviewer reviews the draft Audit Report before it is finalized. Audited Entity 2 Leadership of the Audit Firm* Part of Audit Team's Chain of Command Firm's Control Environment 3 Entity's Control Environment Elements of the Control Environment Technical Advisory Function* Audit and Assurance Ethics Partner* General Controls Detailed Controls Engagement Quality Control Reviewer* Those Charged with Governance Engagement Team 6 7 8 9 Engagement Partner* 11 10 12 13 14 Other Auditing Professional 15 Staff* 14 16 Audit Report *The asterisk indicates all those persons who are in a position to influence the conduct and outcome of the audit. This includes some or all of the leaders of the audit firm including 'key audit partners and all those within a network firm who can directly influence the outcome of the audit engagement. These are the people known collectively as the 'audit team' by the IFAC Code. 'The FRC Ethical Standard would include these people as 'covered persons'.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 100% (1 review)
Answered By
Benard Ndini Mwendwa
I am a graduate from Kenya. I managed to score one of the highest levels in my BS. I have experience in academic writing since I have been working as a freelancer in most of my time. I am willing to help other students attain better grades in their academic portfolio. Thank you.
4.90+
107+ Reviews
240+ Question Solved
Related Book For
The Audit Process Principles Practice And Cases
ISBN: 9781473760189
7th Edition
Authors: Iain Gray, Louise Crawford, Stuart Manson
Question Posted:
Students also viewed these Business questions
-
What would happen to the banks, banking system and businesses with bank deposits, if the people do not repay their bank loans? Discuss
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Draw a total setup outline and decide the expense for the most economical design, i.e., the one where the complete expense of the correspondences circuits and equpment is the least. (b) The...
-
Complete the horizontal analysis of the following comparative income statement? Mile Wide Organic Woolens, Inc. Comparative Income Statement For Years Ending December 31, 2012 and 2013 Increase...
-
The manager of Candace Design, Inc., prepared the company's balance sheet as of June 30, 2016, while the accountant was ill. The balance sheet contains numerous errors. In particular, the manager...
-
The rotor of an electric motor has an angular velocity of 3600 rpm when the load and power are cut off. The 110-lb rotor, which has a centroidal radius of gyration of 9 in., then coasts to rest....
-
If a shareholder sells the warrant, what is he actually selling?
-
Suppose that at trial, Hanousek argued that he could not be convicted because he was not aware of the requirements of the CWA. Would this defense be successful? Why or why not? Edward Hanousek worked...
-
While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company, Good to Eat (GTE),...
-
The IFAC Code and the FRC Ethical Standard contain many requirements and much advice on how auditors should behave. How should the professional bodies ensure that they are adhered to?
-
The problem with independence is that it is an intangible quality. Do you think that the IFAC Code and the FRC Ethical Standard have succeeded in making it less of a problem for the auditing...
-
What are value-added activities? Value-added costs?
-
Orchard Enterprises Limited (OEL) is a medium-sized Miami-based distributor of leisureware fashion garments. It has a mainframe computer in its Miami headquarters to process its major application...
-
Briefly explain the nature of the "aggregation" problem during the assets identification phase of a security program. What basis can be used to choose the "right" level of aggregation?
-
Walmart is the 800-pound gorilla in the retail market, posting the highest sales while being supported by their 2.3 million employees. They are also the number-one retailer in Mexico and Canada, with...
-
Money Mover (MM) is a public electronic funds transfer network with its head office and major computer switch based in Melbourne. The company has computer switches in each capital city throughout...
-
Why might the value of an asset differ depending on who is undertaking the valuation? If different values are assigned to the same asset, which value should security administrators use when valuing...
-
Frederickson Company obtains $40,000 in cash by signing a 9%, 6-month, $40,000 note payable to First Bank on July 1. Fredericksons fiscal year ends on September 30. What information should be...
-
On the basis of the details of the following fixed asset account, indicate the items to be reported on the statement of cashflows: ACCOUNT Land ACCOUNT NO. Balance Date Item Debit Credit Debit Credit...
-
Your client, Hyun Bin, has an offer to come to Canada to work as a financial auditor to work for Deloitte. The position will be full-time and will last at least one year. He has just graduated from...
-
help with this Requirement 1. Compute the breakeven point in units, assuming that the company achieves its planned sales mix.Begin by determining the sales mix. For every 1 deluxe unit(s)...
-
Withdrawals from an Oregon 529 College Savings Network Account, used to pay for qualified expenses, will not be taxed. Qualified expenses include: Question 49Select one: a. Expenses for tuition,...
Study smarter with the SolutionInn App