Page 13 - Auditinf Electronic System

PHASE 1: Accepting the client , depends on 4 where the auditor should ( 4
steps) :

1) Step 1: Auditors should evaluate new or existing client entity before
accepting the audit engagement.
To help audit firms identify potential problem clients in advance, any

limitation that will be imposed on the auditor before accepting the engagement

2) Step 2: The auditor should Identify the reasons why the client needs to
be audited,
Whether the client needs to be audited as regulatory requirement as the case

of listed firms, to apply for a bank loan or to provide more information to interested
users. As it effects his planning of the audit in term of time and efforts assigned to it

3) Step 3: Assigning the appropriate staff:
The auditor must make sure he has the required qualification and skills to

perform the audit and skilled staff available in time to perform the audit on the agreed
upon date.

4) Step 4: Agree to the Fees assigned
The auditor should negotiate and accept the fees assigned to the audit process

before accepting the audit engagement.

PHASE 2: Planning audit approach Using audit risk Model (three steps):

1) Step 1: Obtain an Understanding of the entity and Its environment

The auditor must have a full understanding of the client’s business and related
environment, including knowledge of strategies and processes of his client and it`s
industry. The auditor must also understand any unique accounting requirements of
the client’s industry.

Ex: when auditing an insurance company, the auditor must understand how
loss reserves are calculated.

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‫جميع الحقوق محفوظة ـ الإعتداء على حق المؤلف بالنسخ أو الطباعة يعرض فاعله للمسائلة القانونية‬