Skip to content

ACCA Strategic Professional · Advanced Audit and Assurance (International) · Audit-related and assurance services

Bramwell LLP is asked by Orchid Holdings to perform agreed-upon procedures on inventory records. The directors of Orchid propose that the procedures be described as 'review the inventory records and perform appropriate tests as the practitioner sees fit'. What is the most appropriate response by Bramwell under ISRS 4400 (Revised)?

Bramwell should insist the procedures be specified clearly and objectively. ISRS 4400 (Revised) requires agreed procedures to be described in unambiguous terms, not vague phrases such as 'appropriate tests'. Otherwise the findings cannot be consistently interpreted and the engagement risks implying assurance.

  1. AAccept, because professional judgement on the extent of testing is the practitioner's responsibility
  2. BAccept, provided the report states that the work was an audit-type review
  3. CInsist that the procedures be described in clear, specific terms that do not use vague wording, because the procedures must be agreed and objectively verifiableCorrect
  4. DDecline any engagement, because agreed-upon procedures cannot be performed on inventory

Explanation

ISRS 4400 (Revised) requires procedures to be described in terms that are clear, common, and understood by all parties, and that are not vague or open to varying interpretation. Allowing the practitioner to decide what to do converts the engagement into something with implied assurance. Inventory is a valid subject matter for such an engagement.

Did you get it right without looking?

One question tells you little. A timed set on Audit-related and assurance services shows your real accuracy, how long you take and where you lose marks.

Practise Audit-related and assurance servicesFree diagnostic mock

More Audit-related and assurance services questions