limited engagements examples:
Take-overs, lucky draws, religious, social, environmental. academic, circulation, management, compliance
limitations of audit
NOT 100% correct:
1. sample testing
2. Certain items on FS based on judgement
3. evidence is persuasive
4. There are inherent limitations to ICS (policies)
5. If fraud is well planned, auditors cannot catch without sus activities
Not confirm going concern/viable
advantages of audit
1. Provide objective opinion on credibility of FS
2. Point out weaknesses in ICS
3. Good for bank borrowing
4. minimize misunderstandings (sleeping partners)
5. make sure assets are not stolen
6. Reduce disputes for profit related remuneration
disadvantages
1. expensive and cannot quantify benefits
2. disrupt normal biz ops
What are the expectation gaps?
1. Auditor responsible for not finding out frauds
2. that there is no fraud
3. That they check all transactions
4. Audits are free from error
5. Entity is going concern after audit
how to narrow expectation gap?
Externally: Provide proper education to the public about auditors job
Internally:
1. Provide proper training
2. staff rotation
3. employees declare if they have any affiliation before audit
4. Client pay outstanding fees before audit begin
5. resources of updates laws
6. different staff for audit n non audit
7. 2 partner to check high risk firms
8. firm is not more than 10% of income
9. non audit service is non significant
10. screen clients before taking on