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» ISA 210, Agreeing the terms of Audit Engagements MCQs
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ISA 210, Agreeing the terms of Audit Engagements
ISA 210 Agreeing the Terms of Audit Engagements and the Code of Ethics and Conduct provides guidance to the professional accountant when accepting new work. Here on MCQs.club we have prepared easy Multiple-Choice Questions (MCQs) on ISA 210. These MCQ fully cover ISA 210 IFAC MCQs, ISA 210 Summary MCQs. It a basis for conclusions for SA 210 and These MCQ are useful for Professional accountants, Competitive exams and Business management exams.
- ISA 210 Agreeing the Terms of Audit Engagements and the Code of Ethics and Conduct provides guidance to the professional accountant when accepting new work.
- The above statement is correct
- The above statement is incorrect
- Before accepting (or continuing with) an engagement the auditor must:
- establish whether the preconditions for an audit are present
- establish that there is a common understanding between the auditor and management and, where appropriate, those charged with governance.
- Both A&B
- None
- The preconditions for an audit are that management acknowledges and understands its responsibility for:
- Preparation of the financial statements in accordance with the applicable financial reporting framework.
- Internal control necessary for the financial statements to give a true and fair view.
- Providing the auditor with access to all relevant information and explanations.
- All of the above
- To establish if the preconditions for an audit are present ISA 210 requires the auditor to:
- establish if the financial reporting framework to be used in the preparation of the financial statements is acceptable, for example IFRS or IPSAS
- obtain the agreement of management that it acknowledges and understands its responsibilities
- Both A&B
- None
- Unless required by law or regulation to do so, the auditor shall not accept the proposed audit engagement where:
- a limitation on scope is imposed by management such that the auditor would be unable to express an opinion on the financial statements
- the financial reporting framework to be used in the preparation of the financial statements is unacceptable
- management do not agree to its responsibilities (the “premise”) stated in the preconditions.
- All of the above
- Identify which of the following are Examples of Scope Limitation is imposed by management.
- When auditors are appointed after year end and they are unable to do physical inventory count at year end
- When the management does not provide the auditors with the contact details of debtors to confirm the account head “Accounts Receivable”
- Both A&B
- None
- The engagement letter specifies the nature of the contract between the firm and client. Its purpose is to:
- Minimise the risk of any misunderstanding between the practitioner and client
- Confirm acceptance of the engagement
- Set out the terms and conditions of the engagement.
- All of the above
- Which of the following is correct with regard to engagement letter?
- The engagement letter is sent before the audit commences.
- The engagement letter should be reviewed every year to ensure that it is up to date.
- The auditor should issue a new engagement letter if the scope or context of the assignment changes after initial appointment, or if there is a need to remind the client of the existing terms.
- All of the above
- The reasons for changes in engagement letter would include:
- Changes to statutory duties due to new legislation
- Changes to professional duties, for example, due to new or updated ISAs
- Changes to other services as requested by the client.
- All of the above
- The terms of engagement are recorded in a written audit engagement letter and should include:
- The objective and scope of the audit of the financial statements
- The responsibilities of the auditor
- The responsibilities of management
- Identification of the applicable financial reporting framework for the preparation of the financial statements
- Reference to the expected form and content of any reports to be issued by the auditor.
- All of the above
- (I) (II) and (IV) only
- (I) (II) and (V) only
- None
- The content of the engagement letter should be agreed with the client before any engagement related work commences.
- True
- False
- The engagement letter can be seen as the basis for the contract between the company and the auditor.
- True
- False
- The ISA 210 requires the auditor, for recurring audits, to assess whether:
- circumstances mean that the terms of engagement need to be revised
- management need to be reminded of the existing terms of the engagement.
- Both A&B
- None
- What are the factors that the ISA 210 suggests that may indicate that the provisions of engagement letter issued on the initial appointment need to be revised for recurring audits?
- Any indication that the entity misunderstands the objective and scope of the audit.
- A recent change of senior management.
- A significant change in nature or size of the entity’s business.
- A change in the financial reporting framework adopted in the preparation of the financial statements.
- All of the above
- Which of the following is correct if the entity asks for the audit engagement to be changed to a review engagement to avoid a qualified opinion or a disclaimer of opinion?
- If the auditor considers that it is a reasonable request then revised terms should be agreed and recorded.
- If the auditor is unable to agree to a change of terms he should withdraw from the engagement and consider whether there is any obligation to report the circumstances to those charged with governance, owners or regulators.
- Both A&B
- None
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4 Responses
appriciate your efforts towards this questions. they are amazing & in line with conceptual knowledge of standards. Best of Luck!
Hey Thanks for the valuable feedback!! More to come soon. Stay tuned.
Rather than in bold answer option, it will be better if you can separate answer from options!!
Your suggestion is noted and appreciated.