Skip to content

ACCA Strategic Professional · Advanced Audit and Assurance (International) · Advertising, tendering, and obtaining professional work and fees

Keld & Co won the audit of Mareth Ltd at a fee 30% below the predecessor's. The engagement manager proposes cutting planned procedures on inventory and receivables to match the lower fee, saying the risk assessment is unchanged. Which response is best in line with ISA 220 (Revised) and ISQM 1?

The firm should not cut the work to match the low fee. Procedures must respond to the assessed risks, and the engagement partner must make sure adequate time and resources are available to achieve quality. Financial pressure must not lower audit quality, and documenting it does not fix the problem.

  1. AAccept it, because the engagement partner is responsible only for the final opinion
  2. BCut procedures but record the fee pressure in the working papers
  3. CReject reducing procedures, because the nature, timing and extent of work must respond to assessed risks, and the partner must ensure sufficient resources and time are allocated to achieve qualityCorrect
  4. DResolve it by asking Mareth to provide more client-prepared schedules to replace audit testing only

Explanation

Audit procedures must be responsive to assessed risks under ISA 330, and the engagement partner takes responsibility for achieving quality, including appropriate resources under ISA 220 (Revised). Financial constraints must not reduce quality. Documenting the pressure does not make insufficient work acceptable, and substituting client-prepared schedules for testing does not address the risks.

Did you get it right without looking?

One question tells you little. A timed set on Advertising, tendering, and obtaining professional work and fees shows your real accuracy, how long you take and where you lose marks.

Practise Advertising, tendering, and obtaining professional work and feesFree diagnostic mock

More Advertising, tendering, and obtaining professional work and fees questions