Question

An audit firm must evaluate the client and the engagement according to professional standards. Do you feel that the full evaluation must be done on both new and existing clients? Do you think this evaluation is an effective method to assess clients

Answer 1

Yes, The full evaluation must be done on both new and existing clients. Yes,evaluation is an effective method to assess clients.

The engagement partner shall form a conclusion on compliance with independence requirements that apply to the audit engagement. In doing so,the engagement partner shall:

• Obtain relevant information from the firm and, where applicable,network firms, to identify and evaluate circumstances and relationships that create threats to independence;
• Evaluate information on identified breaches, if any, of the firm’s independence policies and procedures to determine whether they create a threat to independence for the audit engagement; and
• Take appropriate action to eliminate such threats or reduce them to an acceptable level by applying safeguards, or, if considered appropriate, to withdraw from the audit engagement, where withdrawal is possible
  under applicable law or regulation. The engagement partner shall promptly report to the firm any inability to resolve the matter for appropriate action.

Acceptance and Continuance of Client Relationships and Audit Engagements

The engagement partner shall be satisfied that appropriate procedures regarding the acceptance and continuance of client relationships and audit engagements have been followed, and shall determine that conclusions reached in this regard are appropriate.

If the engagement partner obtains information that would have caused the firm to decline the audit engagement had that information been available earlier, the engagement partner shall communicate that information promptly to the firm, so that the firm and the engagement partner can take the necessary action.

Engagement Performance Direction, Supervision and Performance

The engagement partner shall take responsibility for:

• The direction, supervision and performance of the audit engagement in compliance with professional standards and applicable legal and regulatory requirements; and
• The auditor’s report being appropriate in the circumstances.