QUALITY MANAGEMENT (chap 3 slide 8)

 Quality objectives:
- Firm and its personnel fulfil their responsibilities in accordance w professional standards and
applicable legal and regulatory requirements, and conduct engagements in accordance w
standards and requirements
- Engagment reports issued by the firm/engagement partners are appropriate
 Auditor’s responsibilities for quality management under ISQM 1
- Implementing the firm’s responses to quality risks that are applicable to the audit engagement
- Determining whether there is a need to design and implement responses for the engagement that
go beyond the firm’s policies and procedures
- Communicating to the firm all matters required to support the firm’s system of quality managem
ent
- Responsible for managing and achieving quality on audit engagement
- Understanding relevant ethical requirements for audit, including those related to independence
- Acceptance and continuance of client relationship and audit engagement
- Allocating sufficient appropriate resources to be able to satisfactorily complete the engagement.
- Monitoring and remediation, taking overall responsibility for managing and achieving quality an
d documentation

AUDITOR APPOINTMENT & ACCEPTING (chap 3, slide 40)

MONEY LAUNDERING (chap 1)
 Procedures:
- firm must appoint a Money Laundering Reporting Officer (MLRO) who must be a senior m
ember of the firm and must register with a supervisory body (such as HMRC, ICAEW)
- also appoint a Money Laundering Compliance Principal (MLCP), who must be on the board
or of equivalent seniority; where the MLRO is already of this level of seniority then this person
can act as MLCP as well
- recognising ML
- client due diligence
- politically exposed persons
- record keeping of client identification procedures (for 5y after relationship ends)
- reporting ML without tipping off
- training programme should be in place and cover updates in ML regulations
- monitor w policies and procedures
ETHICAL THREATS & SAFEGUARDS (chap 2)
 Threats to objectivity (slide 8)
- Self-interest threat: All firms face the self-interest threat, simply because the client pays the fee,
and to lose a client may be painful.
- Self-review threat: difficult for the firm to maintain its objectivity if any product or judgement
made by the firm needs to be challenged or re-evaluated at a later date. Examples might be
brand or company valuations or aggressive tax schemes, plus where the auditor also carries out
accounting work on behalf of the client.
- Management threat: A management threat arises when the audit firm undertakes work that
involves making judgements and taking decisions, which are the responsibility of
management.
- Advocacy threat: occurs where the professional adopts a stance arguing for or against the client's
point of view, rather than taking a balanced (objective) position. The advocacy threat is difficult
to deal with because, surely, the professional adviser wants to give the client the best possible
support.
- Familiarity or trust threat: if the professional gets to know the client too well, objectivity may
be threatened because the auditor becomes too trusting of the client and professional scepticism
is impaired.
- Intimidation threat: illustrated by the bullying behaviour of a dominant personality who insists
on getting their own way. The situation may go as far as threatening the auditor with removal if
a qualified auditor's report is produced.
 Procedures (slide 10)
- The overall control envi at the firm which ensures a professional approach towards ethical
issues
- The segregation of duties between those engaged on audits and those providing non-audit
services
- Rotation of engagement partners and staff
- Consulting the ethics partner
- Procedures for evaluating the integrity of potential new clients
- The formal process of reviewing the appropriateness of the firm's continuing in office before
its name is allowed to go forward for reappointment
- Staff recruitment procedures
- Regular completion of 'fit and proper' and independence declarations by partners and staff
- Staff training, development and performance appraisal
- Monitoring and evidencing the firm's own systems

 Threats to independence (slide 16)

- Family and other personal relationships
- Financial interests in an equity audited by the firm
- Decisions to join an audited entity
 Safeguards
- Monitor compliance, using systems to ensure that actual or possible breaches are promptly
communicated to the engagement partner
- Evaluate the implications of identified possible or potential breaches
- Report specific circumstances as required by the FRC Ethical Standard
- Prohibit management decision-taking on behalf of the audited entity
- Establish an enforcement mechanism, to ensure that compliance actually happens, through
disciplinary procedures etc
- Empower staff to communicate about ethical issues

 Confidentiality (slide 33)

- Professional accountants should assume that all unpublished information is confidential,
however it is gained, and respect this confidentiality. Professional accountants should always be
alert to the risk that confidential information may be inadvertently disclosed and not
disclose information received in confidence
 Safeguards
 - Advise informant to pass on the in4 to his employer in accordance with company procedures
- Protect the identity of the informant to the extent that this is possible
- Take care in the way that this information is used, if at all

 Conflict of interest (slide 36)

- Where an audit firm has two clients competing in the same industry, each may feel that the
other presents a conflict of interest to the firm, due to the possibility of sensitive data passing
between them via the firm.
 Safeguards
- Disclosure of the circumstances of the conflict
- Obtaining the informed consent of the client to act
- The use of confidentiality agreements signed by employees
- Establishing in4 barriers, such as ensuring that there is no overlap between different teams and
procedures for releasing such information securely
- Regular review of the application of safeguards by a senior individual not involved with the
relevant client engagement
- Ceasing to act – frequently (and obviously) the last resort, should all other safeguards not be
applicable

GOING CONCERN (chap 7)

 Threats
- material uncertainty related to going concern exists
- vi phạm pháp luật (non-compliance)
- mượn tiền ngân hàng nhiều, nợ tới hạn, DN kh có phương án tài chính để trả
- thay đổi key management (risk of management bias)
 Procedures:
- Consider all areas of FS to see whether there are indications that GC may be inappropriate
- Review future plans including financial forecasts and projections, to ensure company will be
able to continues to trade
- Review company’s borrowing facilities and other sources of finance to ensure they will be
adequate for forthcoming year
- Review minutes and other in4 such as correspondence w legal advisers, for indications of
potential GC problems
- Discuss the going concern issue with the client's management
- Test the assumptions
- Obtain written representations from management about things in forecasts to ensure that the
going concern basis is appropriate
- Review disclosures to give a true and fair view
SUBSEQUENT EVENTS (chap 7, slide 13)
- Cung cấp thêm bằng chứng trong lúc làm báo cáo) ⮕ điều chỉnh (Adjusting events)
- Cung cấp thêm bằng chứng sau ngày khóa sổ
⮕ không điều chỉnh (Non-adjusting events), nhưng phải công bố (disclose) thông tin nếu trọng yếu
AUDIT REPORT (chap 6)
 Audit opinions (slide 19)