ACAUD 2247

Risk Assessment:
Performance of Preliminary
Engagement Activities
Phase I-A
P PSA 220

H
A PSA 210
S
E

IA

PSA 220: Quality Control of an Audit of F/S

PSA 210: Agreeing the Terms of Audit Engagements

ref: IFAC Guide for SMEs

Ethics, Independence & PSAs
Auditors maintain
independence & ability to
perform the engagement.

No issue with management

integrity that may affect the
auditor’s willingness to
continue the engagement

No misunderstanding with
the client as to the terms of
engagement.

ref: IFAC Guide for SMEs

PSA 210: Agreeing the Terms
of Audit Engagement
PSA 210.6. Requirements:
Preconditions for an audit
(a)  Determine whether the financial
reporting framework to be applied in the
preparation of the F/S is applicable.
(b) Obtain the agreement of management that it
acknowledges & understands its responsibility.
i.  For the preparation of the F/S in accordance
with the applicable financial reporting
framework including where relevant their
presentation.
ii.  For such internal control as management
determines is necessary to enable the
preparation of F/S that are free from material
misstatement whether due to fraud or error.
iii. To provide the auditors with:
a.  Access to information of which
management is aware that is relevant
in the preparation of the F/S such as
records, docs & other matters
b.  Additional information that the auditor
may request from management for
the purpose of the audit; and
c.  Unrestricted access to persons within
the entity from whom the auditor
determine it necessary to obtain audit
evidence.
ref: IFAC Guide for SMEs
C
O
N
S
I
D P
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R I
N
T
S
Factors in screening Possible Lines of Inquiry:
the client Engagement Acceptance
PSA 210: Agreement on Audit Terms
PSA 210: Recurring Audits
E
N
G
A L
G E
E T
M T
E E
N R
T
E
N
G
A L
G E
E T
M T
E E
N R
T
E
N
G
A L
G E
E T
M T
E E
N R
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E
N
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A L
G E
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 An
engagement
letter is
required to be
revised when
the
circumstances
change such
as:
CASE STUDY – LMN Furniture, Inc: CLIENT ACCEPTANCE & CONTINUANCE check list

Conclusion:

Overall assessment of
engagement risk = low
We should continue with
the client.
a.  Predecessor
Auditor
b.  Other CPAs
c.  Specialists
d.  Use of Client’s
Staff
e.  Internal Auditors
Survey meeting agenda
Opening conference or Survey Mee1ng: AGENDA
Introduction 01
Survey meeting agenda

Introduction 01
Business updates 02
Business updates 02

Our audit approach Our audit approach

03 03

Areas of focus 04

Areas of focus Management’s responsibilities

04
05

The PwCand
Reports experience
timetable 06
Management’s responsibilities
Other matters 05 07

The PwCand
Reports experience
timetable 06
PwC Institucion Teresiana de Educacion Y Cultura Inc. | May 23, 2017

Other matters 07
 2017 Engagement Team
Danica Joy Montema
Associate

2017 Engagement Team

Danica JoyYasi
Ma. Karen Mo
Associa
Associate

Ma. Kare
Catherine H. Santos Finagene Marie A. Gumpal Kathlyn Ann D. Masil Associ
Lotis Plaza
Associate
Engagement Leader Assurance Manager Assurance Senior Associate

Catherine H. Santos Finagene Marie A. Gumpal Kathlyn Ann D. Masil Lotis Pl

Associa
Engagement Leader Assurance Manager Assurance Senior Associate Ghia Azuran
Associate

Ghia Azu
Associa

PwC Institucion Teresiana de Educac

 Business outlook Expenditures and Funding Major contracts
disposals and agreements

• Business plans • New • Cash flow • New

• Strategies constructions situations • Revised/rolled
• Prospects • Significant • Sources of • Terminated
purchases funds
• Challenges
• Asset disposals • Capital mix

Business updates
Tuition fees and Policies and Board actions Litigations and
Inquiries with management
Business outlook Expenditures and enrollees Fundingprocedures Major contracts assessments
disposals and agreements
Business outlook Expenditures and• Change inFunding
fees • Revisions to theMajor contracts
• Board • Any updates on
Number of existing resolutions tax assessment
disposals • and agreements
• Business plans • New • Cash flow• Accounting • New
enrollees • Board • Any updates on
system changes approvals litigations
• Strategies constructions situations • Revised/rolled • New
• Business plans • New • Cash flow • New
• Prospects • Significant • Sources of • Terminated
• Strategies constructions situations • Revised/rolled
purchases funds
• Challenges • Significant • Sources of
• Prospects • Asset disposals • Capital mix • Terminated
purchases funds
• Challenges
• Asset disposals • Capital mix
PwC Institucion Teresiana de Educacion Y Cultura Inc. | May 23,
Tuition fees and Policies and Board actions Litigations and
nt enrollees
Tuition fees and
procedures
Policies and Board actions
assessments
Litigations and
nt enrollees procedures assessments
• Change in fees • Revisions to the • Board • Any updates on
• Number
Change inoffees • existing
Revisions to the • resolutions
Board • tax
Anyassessment
updates on
• enrollees
Number of • Accounting
existing • Board
resolutions • Any updates on
tax assessment
enrollees • system changes
Accounting • approvals
Board • litigations
Any updates on
system changes approvals • New
litigations
• New

Institucion Teresiana de Educacion Y Cultura Inc. | May 23, 2017

 Annual
audit
cycle
Annual
audit Annual
ual cycle audit
dit Top-down and
cycle
risk-
based methodology
cle
Our audit
Top-downTop-down
and risk-and risk- Top-down and risk-based m
Annual
based methodology
based methodology
audit
and risk-
hodology cycle
PwC Institucion Teresiana de Edu

Our
Ouraudit approach
audit approach
Top-down
Top-down andrisk-based
and risk-based methodology
methodology
Our
Top-down and risk- Top-down and risk-b
based
PwC
methodology Institucion Teresiana de Educacion Y Cultura Inc. | May 23, 2017
PwC Institucion Teresiana de Educacion Y Cultura Inc. | May 23, 2017
 Risk assessment process and controls
established by management in identifying and
Risk assessment responding to fraud risks
process

Fraud incident/s Fraud incidents identified

and/or reported during the
risk year

Any other areas you would

Other matters want PwC to consider in the
course of this audit
engagement

Institucion Teresiana de Educacion Y Cultura Inc. | May 23, 2017

 Risk assessment proc
established by management in
Risk assessment respondi
process

Fraud incident/s
Areas of focus Fraud inc
and/or rep
Inquiries on the controls and fraud risk
Management
assessment Risk of fraud in
Other areas
override of controls revenue recognition
Management Risk of fraud in Any other
Other areas
Other matters want PwC to
override of controls revenue recognition cou

Allowance for doubtful

accounts

us PwC Allowance for doubtful

Inventories
accounts
Institucion Teresiana de Educacion

shot
us Property and equipment
Inventories

shot Manual journal

Auxiliary centers Accruals
Property and equipment
entries
Manual journal Investments
Auxiliary centers Accruals
entries
Payroll
Investments

Related parties
Payroll

Tax matters
Related parties

Tax matters
Institucion Teresiana de Educacion Y Cultura Inc. | May 23, 2017

Institucion Teresiana de Educacion Y Cultura Inc. | May 23, 2017