You may be one of the tens of thousands of smaller CPA firms performing smaller audits questioning how you can survive the competition for smaller audits with larger firms that can afford huge investments in technology. The truth is we have done it before and we can do it again!
As such, we have devised a series of articles in order to give you the confidence and direction you need. authored by audit expert Larry Perry CPA.
In this article, the focus will be on pre-conditions for maximizing small audit quality and profitability in these:
- Clarified Auditing Standard AU-C 210, Terms of Engagement
- Practical Pre-Conditions to be Discussed with Reporting Entity
- Major Pre-Conditions for the CPA Firm
Clarified Auditing Standard AU-C 210, Terms of Engagement
1. Objective of the auditor
The auditor’s objective is to accept an audit engagement for a new or existing audit client only when the basis upon which it is to be performed has been agreed upon through:
- Establishing whether the preconditions for an audit are present
- Confirming that a common understanding of the terms of the audit engagement exists between the auditor and management and, when appropriate, those charged with governance.
- Preconditions for an audit. The use by management of an acceptable financial reporting framework in the preparation of the financial statements and the agreement of management and, when appropriate, those charged with governance, to the premise on which an audit is conducted.
- Recurring audit. An audit engagement for an existing audit client for whom the auditor performed the preceding audit.