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Evaluation of Internal Control Environment

In: Business and Management

Submitted By riyanesh
Words 8902
Pages 36
CASE STUDY
PA503 FUNDAMENTALS OF AUDITING
Audit Firm
Contact
Number

JABATAN PERDAGANGAN
Programme
Section
CHAPTER 1
CHAPTER 2

Email

Materiality and Audit Risk
Corporate Governance

PROBLEM SOLVING
CLO2 | LD2/P3

Instruction: Please answer ALL questions.

| Part 1

NEW CLIENT ACCEPTANCE DECISION

Learning Objectives
After completing and discussing this case, you should be able to:
1. Understand the types of information relevant to evaluating a prospective audit client
2. List some of the steps an auditor should take in deciding whether to accept a prospective client
3. Identify and evaluate factors important in the decision to accept or reject a prospective client
4. Understand the process of making and justifying a recommendation regarding client acceptance
INTRODUCTION
Your accounting firm is a medium-sized, accounting firm in Malaysia, formed in
2012, mainly provides auditing and tax services. But it has recently had success in building the information-systems-consulting side of the business.
Recently, your group has been assigned for the first time to perform audit engagement procedures for a small and medium-sized company in Malaysia. One of team member has been a senior auditor for the past three years. Your first assignment is to assist an audit partner on a client acceptance decision. The partner explains to you that the prospective client, Unggul Holdings Berhad, is a medium-sized textile company.
The partner recently met the company's top management during an informal social dinner. The company Chief Executive Officer (CEO) indicated that, after some difficult disussions, the company has decided to terminate its relationship with its current auditor. The CEO explained that the main reason for the switch is to establish a relationship with a more nationally known accounting firm because the company plans to…...

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