Critical Evaluation of Current Events in Auditing

CRITICAL EVALUATION
OF CURRENT EVENTS IN
AUDITING

TABLE OF CONTENTS
.........................................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Procedures to be performed by Dyke & Co. before accepting FHL as client.............................1
Information to sought and procedures to perform during risk assessment and planning phase.. 3
Key business risk faced by FHL, consequences and the measures for mitigating risks..............4
Test of controls for obtaining the audit evidences related to the accounts receivable.................5
Current issues over the poor audit work and impact on organisations........................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Auditing refers to critical inspection and evaluation of books of accounts. Inspection and
audit is done by professional auditor. It ensures that companies are maintaining all the regulatory
frameworks for recording the transactions. The auditing standards lay down the procedures for
evaluation of different events and transactions carried out in an organisation by auditor. Auditor
is responsible for identifying the accuracy and fairness of the financial statements prepared by
company. Report will reveal about nature scope of internal control processes and auditing. It will
give an understanding and evaluation of accounting and internal control risks and systems. The
importance of audit evidence, audit procedures and critically reviewing the audit risks that can
affect the organisation. Main purpose of auditing is to ensure that financial statement of
organisation represents true and fair of the financial position and is complying with all the
reporting framework of accounts.
MAIN BODY
Procedures to be performed by Dyke & Co. before accepting FHL as client
As per IFAC code of ethics for professional accountants before accepting relationship wit
new client, professional auditor in practice is required to ensure that accepting an audit
engagement will not create threat in complying with fundamental principles. Firm have to
investigate about potential client, owners & activities of business for evaluating integrity of
business that can create an unacceptable risk (Singh, 2015). Investigative procedures are known
as customer due diligence procedures. It is essential for audit firm to assess integrity of
management and principle of the prospective client. Companies with negative reputation should
not be accepted by company.
Preliminary Conference
Preliminary conference should be held between FHL and Dyke after showing interest in audit
firm. The factors that can be discussed in the meeting depends upon integrity of client. Firstly the
capabilities of firm, it competency in the industry should be discussed by firm to FHL. Reason
for the change of auditor are to be asked by company. Firm should discuss the structure it will
follow for performing the audit of company (Burks, 2015). Firm should inform client that
communication with predecessor will be made and evaluation of the business firm will be done
before accepting the audit engagement.
Pre acceptance procedure
1