When A Client Accepts The Services Of An Accountant Without An Agreement Concerning Payment

With respect to the latter point, where management imposes limiting the scope of the work of the statutory auditor as part of a proposed audit undertaking, the statutory auditor should reject the audit undertaking if the restriction could lead to the legal auditor being required to reject the closing notice. The commitment should also be rejected if the financial reporting framework is not acceptable or if management does not present the agreement described above. (ISA 580, written statements also require management to make written statements about its account-setting responsibilities.) The last point is important because it is related to corporate governance. According to many corporate governance codes, including the UK Corporate Governance Code, the client`s audit committee should be involved in any decision as to whether the audit firm can be responsible for providing a non-audit service. Therefore, when it has committed to obtaining a non-audit service for an audit mandate, a thorough discussion should take place with the governance officials, including the audit committee, in order to obtain approval of the commitment to continue. In addition to verifying independence and objectivity, audit firms should remember that fundamental ethical principles apply to non-audit services, as well as audits. Therefore, when considering whether a non-audit service should be performed, the company should assess its competence in the performance of the work, assess whether confidentiality is a problem and be able to comply with all relevant laws and regulations. As noted above, candidates` responses to non-exam service requirements must apply knowledge to the scenario in order to score points. Evaluation of new commitments is an essential part of successful practical management. The current debate over the acceptance of auditors who provide non-audit services to their audit clients shows that ethical issues will continue to play an important role in acceptance decisions.

Written by a member of the Paper P7 audit team Once a company has decided to conduct an audit, it must meet the requirements of ISA 210, agreeing to audit commitment requirements.