First Time Audits - Cas

First Time Audits

First Time Audit

           A first time audit occurs for an auditor when the firm engages in an audit of a new client or after major accounting standards have changed. The new client can be defined as a company that has never been audited or has chosen to discontinue their relationship with the previous auditor leading them to engage a new auditor. The three situations why first time audits occur include:

*        a new client that has never been audited before

*         a new client that has been previously audited by another firm

*         performing an audit either with a new or existing client after accounting standards have changed

The major difference between a new client that has never been audited before compared to those that have been previously audited is the lack of auditing documentation for the new auditors to work with. The accuracy of the financial statements made available by the preparers of the statements within the clients business is another significant key risk for first time audits. These differences highlight the associated risks with initial audits, which can be minimized through extensive planning procedures throughout the audit process.

           Before an initial audit the auditor should undertake specific activities including procedures to satisfy the decision of accepting a client relationship and the audit engagement as a whole, as well as communicating with the previous auditors in assessing the decision to accept the engagement. Planning the audit in terms of purpose and meeting objectives are the same for initial and recurring audit engagements. Though for initial audits, auditors should take actions to determine the additional planning activities to establish an appropriate strategy and plan, including determining the audit procedures to obtain sufficient appropriate audit evidence regarding the opening balances. Evaluating opening balances and its accordance to standards and accounting...