AUE2601
ASSIGNMENT 2
SECOND SEMSTER 2022
BY: MTHOMBENI : 0767297208
1
, PLEASE EDIT SOME POINTS TO AVOID PLAGIARISM
QUESTION 1
With reference to the “background information” and “preliminary engagement
activities and planning” information:
Describe the preconditions for an audit that should be met before an
audit clientcan be accepted.
In terms of ISAs an audit engagement can only be accepted if; the auditor has
establishedwith the client that the preconditions for an audit are present
Preconditions for an audit
The acknowledgement by management that it understands its
responsibilities to provide unrestricted access to persons within the
company from whom the auditor determines it is necessary to obtain
audit evidence
The financial statements are prepared in terms of an acceptable
financial reportingframework
An acknowledgement by management that it is responsible for
such internal control as it (management) determines is necessary
to enable the preparation of financial statements which are free
from material misstatements.
The auditor should acquire preliminary engagement information, in order
to decide whether to accept a new audit client. Describe the procedures
ZPK could have followed to acquire preliminary information about AST,
before accepting AST as a client.
Procedures the auditor could use to obtain preliminary information on the
business areas follows:
communication with the previous auditor (in compliance with the
Code of Professional Conduct)
Discussion with the client’s directors, senior financial personnel, audit committee
and so on · external sources: inquiries from the firm’s bankers, legal counsel and
so on (permission would have to be sought)
2
ASSIGNMENT 2
SECOND SEMSTER 2022
BY: MTHOMBENI : 0767297208
1
, PLEASE EDIT SOME POINTS TO AVOID PLAGIARISM
QUESTION 1
With reference to the “background information” and “preliminary engagement
activities and planning” information:
Describe the preconditions for an audit that should be met before an
audit clientcan be accepted.
In terms of ISAs an audit engagement can only be accepted if; the auditor has
establishedwith the client that the preconditions for an audit are present
Preconditions for an audit
The acknowledgement by management that it understands its
responsibilities to provide unrestricted access to persons within the
company from whom the auditor determines it is necessary to obtain
audit evidence
The financial statements are prepared in terms of an acceptable
financial reportingframework
An acknowledgement by management that it is responsible for
such internal control as it (management) determines is necessary
to enable the preparation of financial statements which are free
from material misstatements.
The auditor should acquire preliminary engagement information, in order
to decide whether to accept a new audit client. Describe the procedures
ZPK could have followed to acquire preliminary information about AST,
before accepting AST as a client.
Procedures the auditor could use to obtain preliminary information on the
business areas follows:
communication with the previous auditor (in compliance with the
Code of Professional Conduct)
Discussion with the client’s directors, senior financial personnel, audit committee
and so on · external sources: inquiries from the firm’s bankers, legal counsel and
so on (permission would have to be sought)
2
