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The document lists nine characteristics of accounting entries that could indicate possible fraud: 1. Entries recorded at the end of the period, with no explanation or vague descriptions. 2. Entries made in round numbers. 3. Entries made outside of office hours. 4. Entries made to suspense accounts. 5. Entries involving contra accounts. 6. Entries involving directors or related parties. 7. Entries that lack commercial rationale. 8. Entries involving accounts prone to misstatement. 9. The document discusses potential threats to independence for an engagement partner and evaluating quality of an internal audit function.

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37 views1 page

Sa

The document lists nine characteristics of accounting entries that could indicate possible fraud: 1. Entries recorded at the end of the period, with no explanation or vague descriptions. 2. Entries made in round numbers. 3. Entries made outside of office hours. 4. Entries made to suspense accounts. 5. Entries involving contra accounts. 6. Entries involving directors or related parties. 7. Entries that lack commercial rationale. 8. Entries involving accounts prone to misstatement. 9. The document discusses potential threats to independence for an engagement partner and evaluating quality of an internal audit function.

Uploaded by

SR TG
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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 are recorded at the end of the period

 have no explanation or have a vague description


 are in round numbers
 are made outside of office hours
 are made to suspense accounts
 involve contra entries
 involve directors or related parties
 lack commercial rationale
 involve accounts prone to misstatement.
A.4
a) When an individual is involved in an audit engagement over a long period of time, familiarity and
self-interest threats might be created. In this situation Mr. Walid Siraj has already worked as
engagement partner and EQCR for two years and four years respectively so the threat existence is
evident from the above situation.
As the Company is listed on PSX so the requirement cooling-off period is also applicable in this
current situation. Mr. Walid Sirj had already worked for cumulative four year as EQCR and two
years as engagement partner so the time on period in any role of Key Audit Partner of cumulative
seven years is not completed. In the given situation, he can be appointed as engagement partner
for one more year i.e 30 June 2021. Provided that if he want to be engagement partner after
completion of cumulative seven years as KAP then cooling off period of five consecutive period
will be required.

b) Self-interest threat exists as the amount in dispute is significant. The firm may be more inclined
to issue an unmodified audit opinion if it enhances its prospects of recovering the fee.
The ethics partner should be notified and a review of the audit work should be performed by a
partner not involved in the audit. If the threat cannot be reduced to an acceptable level then the
firm should resign.
c) Performance indicators which could be used by audit committees to monitor the quality of an
internal audit function.
 Actual time compared to budget
 Actual work completed compared to planned work
 Number of reports produced within target dates
 Number of recommendations accepted
 Savings identified
 Feedback from users
 Results of third party reviews
 Number of staff in post against planned requirement/staff turnover rates
 Number of qualified staff.

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