Question

Auditing 1
Assignment 1
A. Majdi has a degree in accounting from BZU and works for a local accounting office. He was asked by a friend to prepare Financial statements for a small company in Ramallah.
To help his friend Majdi prepared the financial statements and a report indicating that the financial statements were audited by him.
What standards were violated and why?

Is there a violation of the elements of audit quality control, briefly discuss?

B. Mira A Certified Public Auditor licensed in Palestine is the partner in charge of Ooredoo audit. In order to save cost, she hired a group of students from Al-Najah University to help her conduct the audit. A month later Mira received the audited financial statements and the report from the students. She signed it and send it to the board of directors of Ooredoo.
What standards were violated and why?

Is there a violation of the elements of audit quality control, briefly discuss?

Answer 1

Element of quality control as per SQC 1 and SA 220

As per SQC 1 "Quality Control for Firms that perform Audits and Reviews of Historical Financial of Information, and Other Assurance and Related Services Engagements", the firm's system of quality control should include policies and procedures addressing each of the following elements:

a)Leadership responsibilities for quality within the firm.

b) Ethical requirements,

c) Acceptance and continuance of client relationships and specific engagements.

d) Human resources.

e) Engagement performance.

f) Monitoring

The quality control policies and procedures should be documented and communicated to firm's personnel.

A) A financial statements audit is the examination of an entity's financial statements and accompanying disclosures by an independent auditor only. The result of this examination is a report by the auditor, attesting to the fairness of presentation of the financial statements and related disclosures.

Majdi has a degree in accounting from BZU and works for a local accounting office. Hence she can prepared the financial statements and but cannot ndicating that the financial statements were audited by him and she cannot prepare the report as it is prepare but auditor only.

Auditor responsibility:

B) In conducting an audit of financial statements, the overall objectives of the auditor are:

1)To obtain reasonable assurance about whether the F. S. as a whole are free from material

misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the F.S. are prepared, in all material respects, in accordance with an

applicable FRF, and

2) To report on the F.S. and communicate as required by the SAs, in accordance with the auditor's findings.

In all cases when reasonable assurance cannot be obtained and a qualified opinion in the auditor's report is insufficient, the SAs require that the auditor disclaim an opinion or withdraw from the engagement

It is the violation of SA 200.