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An auditor engagement letter is a formal agreement between the auditor and the client that outlines the scope of the audit, the responsibilities of both parties, and the terms of the engagement. It typically includes details such as the objectives of the audit, the timeline, fees, and any specific reporting requirements. This letter helps establish clear expectations and serves as a legal document that protects both the auditor and the client throughout the audit process. It is essential for ensuring transparency and mutual understanding before the audit begins.
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What are the Threats to Auditors independence?
Some threats to an auditors independence are as followed:Self-interest threat - when the auditor on the engagement team could benefit in some way or form (financially for example) with the clientFamiliarity threat - when the auditor has some form of a close relationship with the client (be it the top management or employees, or the firm) which may cause them to be generous and sympathetic when assessing the clientIntimidation threat - when the auditor is deterred from acting in an objective, professional manner as a result of threats (real or not) from the clientSelf-review threat- when the auditor is hired to review/evaluate any product or judgment that they themselves were responsible for preparing (from a previous engagement) in order to reach a conclusionAdvocacy threat - when the auditor promotes the client (their business, the client themselves, etc) to the point that objectivity may be (perceived) to be impaired
What factors in the auditor and client relationship create a power imbalance in favor of the client?
What factors in the auditor and client relationship create a power imbalance in favor of the client? In:http://wiki.answers.com/Q/FAQ/3335-35 [Edit categories]
When should an audit engagement letter be issued to an audit client?
It should be issued during the planning stages of the audit
How do i construct a letter to terminate an external auditor's appointment?
The writing of a letter to terminate an external auditor's appointment should start with your authority to do so if it is not clear who you are to the auditor. The letter should thank the person for their service. Finally, the letter should end with the expected end date.
Can an external auditor subcontract another external auditor?
Yes, an external auditor can subcontract another external auditor, but this practice typically requires transparency and adherence to professional standards. The primary auditor retains responsibility for the audit's overall quality and compliance with relevant regulations. Additionally, the engagement terms should clearly outline the subcontractor's role and responsibilities to ensure accountability.
What are the Threats to Auditors independence?
Some threats to an auditors independence are as followed:Self-interest threat - when the auditor on the engagement team could benefit in some way or form (financially for example) with the clientFamiliarity threat - when the auditor has some form of a close relationship with the client (be it the top management or employees, or the firm) which may cause them to be generous and sympathetic when assessing the clientIntimidation threat - when the auditor is deterred from acting in an objective, professional manner as a result of threats (real or not) from the clientSelf-review threat- when the auditor is hired to review/evaluate any product or judgment that they themselves were responsible for preparing (from a previous engagement) in order to reach a conclusionAdvocacy threat - when the auditor promotes the client (their business, the client themselves, etc) to the point that objectivity may be (perceived) to be impaired
What various defenses may auditor use in defending against a suit brought by a client?
An auditor may defend against a suit brought by a client by showing that they conducted the audit in accordance with professional standards, that the client's losses were not caused by the auditor's actions, or that the client failed to provide accurate information. Additionally, the auditor may argue that the client's claims are time-barred or that the damages claimed are unreasonable.
Is an engagement letter considered a contract?
Yes, an engagement letter is considered a contract between a client and a professional service provider outlining the terms of their agreement.
What factors in the auditor and client relationship create a power imbalance in favor of the client?
What factors in the auditor and client relationship create a power imbalance in favor of the client? In:http://wiki.answers.com/Q/FAQ/3335-35 [Edit categories]
What is remunerated?
The audit fee payed by client to the auditor.
What factors in the auditor-client relationship create a power imbalance in favor of the client?
In the auditor-client relationship, power imbalances often arise from the client's financial dependence on the auditor for favorable audit outcomes, which can lead to pressure on the auditor to conform to the client's expectations. Additionally, clients may possess more information about their operations and financials, creating an asymmetry that can disadvantage auditors. The potential for future business engagements also incentivizes auditors to maintain good relations with clients, further tilting the balance of power. Lastly, clients can influence the auditor's reputation and career prospects, adding another layer of pressure that can compromise the auditor's independence.
What is auditors remuneration?
The audit fee payed by client to the auditor.
What is the auditor's responsibility for finding error and fraud?
identified by the client
Attorney Engagement Letter?
Get StartedThe Attorney Engagement Letter documents the terms of the sale of services by a legal provider (the "Law firm") to another company or an individual (the "Client").The basic elements of the Attorney Engagement Letter are:Identification of the parties.A description of the services to be performed.Payment terms."
When should an audit engagement letter be issued to an audit client?
It should be issued during the planning stages of the audit
What is audit engagement?
An audit engagement is when an auditor is performing an audit on a business. They are looking at all their books to make sure the business is recording their finances correctly.
What is the agreement between a CPA and her client company to perform a review is called?
The agreement between a CPA and her client company to perform a review is called an engagement letter. This document outlines the scope of the review, the responsibilities of both parties, and the terms of the engagement. It serves to clarify expectations and ensures that both the CPA and the client are aligned on the objectives and deliverables of the review process.
