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please read the case study and answere the questions ( ABC & Co . , a medium - sized manufacturing company, has approached your audit
please read the case study and answere the questions ABC & Co a mediumsized manufacturing company, has approached your audit firm to conduct an independent audit of their financial statements for the year ended December
The company's management is looking to obtain an unqualified audit opinion to present to their stakeholders.
PreEngagement Steps:
Initial Contact: The company's CFO, Mr John, contacts your firm to inquire about audit services.
Preliminary Discussion: Your firm's partner, Ms Sarah, has a phone call with Mr John to discuss the scope of work, timeline,
Proposal Submission: Your firm submits a proposal outlining the scope of work, approach, timeline, and fees.
Background Check: Your firm conducts a background check on ABC & Co to identify any potential risks or conflicts of interest.
Initial Engagement Letter Phase:
Engagement Letter: Your firm prepares an engagement letter outlining the terms of the audit engagement, including:
Scope of work
Objectives
Responsibilities
Timeline
Fees
Terms of payment
Questions
What procedures would you perform during the background check to identify potential risks or conflicts of interest?
How would you verify the integrity and reputation of ABC & Cos management and those charged with governance?
What sources of information would you use to research ABC & Cos history, financial performance, and industry reputation?
How would you assess the company's complexity, risk profile, and materiality thresholds to determine the appropriate scope and approach for the audit?
What independence and objectivity requirements would you need to fulfill to ensure the audit engagement is free from conflicts of interest?
What are the essential terms and conditions that should be included in the engagement letter?
How would you determine the scope of work and objectives for this audit engagement?
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