What is Preconditions for an audit?
In short
Before accepting an audit, the auditor determines that management uses an acceptable financial reporting framework and agrees it is responsible for the financial statements, for internal control and for giving the auditor access to information.
Key takeaways
- If the preconditions aren't present, the auditor doesn't accept the engagement.
- Management's agreement is documented in the engagement letter.
- Management's responsibilities are confirmed again in the representation letter.
Where it's tested
AUD: Engagement Acceptance & Quality Management — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Which precondition must be present before an auditor accepts an audit engagement?