Question 1 (12 marks)

Public accounting firms perform audits of financial statements. CAS 220, Quality Control for an Audit of Financial Statements addresses the specific responsibilities of the auditor regarding quality control procedures for an audit of financial statements. All firms that perform audits must have standards for audit fieldwork and quality control procedures that must be followed by all staff performing an audit of financial statements.

Required:

i. Briefly outline the requirements for Quality Control for an Audit of Financial Statements found in CAS 220. (6 marks)

ii. Explain whether or not an Engagement Quality Control Reviewer is required for all audits of financial statements (3 marks)

iii. Explain whether or not students who work for accounting firms performing audits are required to comply with the Quality Control Requirements for an Audit of Financial Statements

Question 2 (9 marks)

You are the auditor of Hi Tech Innovations (HTI). HTI has an internal audit department that perform operational audits, such as the testing for internal controls over inventory, cost allocation etc.

Required

I. Explain the Canadian Auditing Standards (CAS 610) requirements that the external auditors must follow to evaluate the internal audit function before any reliance can be placed on the internal audit department.

II. Identify two similarities and two differences between internal and external auditors