Sparkies Has Undergone a Period of Substantial Growth Following Its

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The Answer is The duties to be undertaken by a professional firm on behalf of its clients should be clearly set out in a letter of engagement. This serves as written confirmation of the agreement between the parties and serves to avoid misunderstanding.
If it is agreed between an auditor and his client that the auditor will provide services in addition to the statutory audit function then this is generally acceptable. The auditors must, nevertheless, take care not to perform executive functions or to take executive decisions. These are duties of management and Tickit & Run must take care not to drift across the borderline of what is proper.
In the case of privately owned or unlisted companies it is frequently necessary to provide a much fuller service than would be appropriate for a publicly owned or listed company and this may include participation in the preparation of accounting records. Sudden Haddock & Co must, however, take particular care to ensure that the client accepts full responsibility for such records and that objectivity in carrying out the audit is not impaired.
One way in which Sudden Haddock & Co may attempt to retain their objectivity is by employing the idea known as the 'Chinese Wall' whereby different staff are used on each type of work so that information on accountancy work is not given to audit staff. In practice this is likely to prove difficult to implement for the small audit firm and small clients.
The area of systems and control advice is particularly fraught with difficulties. An auditor should regularly point out weaknesses in his clients' systems and recommend improvements in their internal control by sending an annual memorandum on internal control in which weaknesses and strengths in the system would be discussed. The implementation of new systems is, however, very much an executive function and as such falls outside the scope of services which should normally be undertaken. The auditor firm may act in a consultative
capacity in reviewing systems, both computer based and manual, especially with regard to internal control aspects. As far as computer systems are concerned the introduction of proper controls is so important that auditors may wish to give advice at the development stage, but, on the whole, auditors should avoid going beyond the giving of advice.
The overall theme of this discussion is the need for Sudden Haddock & Co to retain their independence and objectivity. Their prime function is to undertake an independent examination of their client's financial statements and to report thereon. In order to fulfil this role in a satisfactory manner they must be, and be seen to be, independent. An undue involvement with accountancy or systems work may impair their ability to take a truly objective view.

Sparkies Has Undergone a Period of Substantial Growth Following Its

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Sparkies Has Undergone a Period of Substantial Growth Following Its

Essay

Correct Answer:VerifiedShow Answer

Correct Answer:
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