An introduction of risks and potential consequences facing audit practices when acquiring new audit engagements. You should make reference to at least two corporate examples.
Assignment Title: Risk Management: A critical evaluation of the quality and effectiveness of audit
Description of the assignment:
The audit engagement environment is significantly changing.
“Currently, auditors must be changed every 20 years and audits must be re-tendered every 10 years. The CMA decided that it would not increase the frequency of rotation as one of its remedies. It accepted that this “could interrupt the close relationship that may develop among management, audit committees and the audit firms, over a long audit tenure”, and increase the independence of auditors, while it could also promote greater competition. However, the CMA was concerned that more frequent audit tenders and auditor rotation would increase the costs for the audit firms and companies” .. ’”whilst reducing audit quality if recently appointed audit firms did not fully understand the businesses of their audit clients.”
Your essay should include the following elements, and marks are awarded as follows:
- An introduction of risks and potential consequences facing audit practices when acquiring new audit engagements. You should make reference to at least two corporate examples. One example should be a FTSE100 company which has changed auditors in the last 24 months, and the second example must be Fraser Group Plc (formerly known as Sports Direct Plc) (30%)
- An explanation of three key procedures adopted to reduce the risks to audit practices, when dealing with new client engagements. Reference should be made to potential risks connected to the specific example in the element above (30%)
- A critical evaluation of the effectiveness of those procedures, including any recommendations you would make to improve those procedures (30%)
The remaining 10% of marks is split evenly between presentation/grammar and referencing. Please note that although these elements are awarded 10% of the marks, poor presentation/grammar and referencing will impact on the readability and credibility of all areas of your essay, and therefore may affect other marks.
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