Professional Engagement Manual
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What’s New
Update #40
April 2008
To: Subscribers of the Professional Engagement Manual — Update #40
Dear Colleagues:
Enclosed is Update #40 to the CICA Professional Engagement Manual. This
update contains some revised and reorganized chapters and sample forms, and
three new chapters — The Nature of Internal Control, Future-oriented Financial
Information, and Making Audit Inquiries.
Highlights of the update include:
Part A — Basic Concepts
Chapter 1.2 — Client Acceptance and Continuance
Minor changes.
Chapter 1.3 — What is a Risk-based Audit?
A new overview chart of the risk-based approach has been included plus some
updating and expansion of the original text.
Chapter 2.1 — The Nature of Internal Control
This new chapter provides an overview of internal control over financial reporting
and the five components of internal control that are to be addressed in an audit. The
previous 2.1 has been moved to Chapter 2.3 — A Risk Management Process.
Chapter 2.2 — The Nature of Fraud
This chapter (formerly 2.3) has been revised and reorganized.
Part D — Other Assurance Engagements
Chapter 10.2 — Future-oriented Financial Information
This new chapter provides guidance with respect to the public accountant’s involvement with future-oriented financial information. The appendix to this chapter
includes sample forms for a FOFI engagement.
Part E — Engagement Techniques
Chapter 11.1 — Making Audit Inquiries
This new chapter provides general guidance for auditors in making inquiries of the
entity’s key employees to help them identify potential risk factors.
Professional Engagement Manual
Practice Aids — Sample Forms
Audit engagement forms that have changed/removed or added in this update are as
follows. One review form has also been revised in order to parallel audit form 315.
Revised Audit Forms
The following forms have been revised to improve their ease of use:
310, 315, 335, 400, 402, 524, 526, 534, 590, 610, 615, 620, 630, 662, 666, 670
The .100 forms in the A-Z, AA-ZZ and 700 series have been revised to:
• Contain the detailed audit planning information that was previously contained
in the .105 series of forms (which have now been deleted).
• Move the examples of extended and other audit procedures to a new Form
690 — Library of potential additional audit procedures.
Forms 585, 638, 640 and 652 have been removed.
New Audit Forms
Four new audit forms have been added, including:
•
404 Combined scoping (403) and summary of assessed risks (590)
This worksheet provides an alternative to Forms 403 and 590.
•
511 Worksheet — Business and fraud risk identification
This worksheet provides a listing of typical business and fraud risk factors.
•
584 Summary of control risk assessments
This form can be used in conjunction with the control design matrices to record
control risk assessments overall and by business process.
•
690 Library of potential additional audit procedures
This form contains examples of additional audit procedures that could be considered to address specific risks.
Revised Review Form
• 315
We Welcome Your Comments
We hope that the PEM continues to meet your practice needs. We appreciate hearing from our subscribers and will continue to respond to your valued comments
and suggestions. Please send your comments to my attention by mail, e-mail
bryan.walker@cica.ca or fax (416) 204-3414.
Yours very truly,
Bryan Walker, CA
Director, Practitioner Support
Member Services