Existing engagement Continuance 410

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This form may be used for four periods if the response/comments for each question are updated. Indicate the period covered, the
initials of the updater and the date of the update.
Entity

Period
ended

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Objective: To assess whether the level of engagement risk is acceptable to the firm, the firm has the necessary competencies, the
firm and staff comply with the independence requirements and the engagement preconditions have been met.

Nature of basic assignment

Financial reporting framework
Other assignments requested/performed
Deadline for completion of audit

Yes/No (plus initials and date)

Engagement risk assessment

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Would continuing with this engagement contravene any of the firms quality assurance policies
on client acceptance/continuance?
Are there any new or emerging risks that would impact on the decision to continue with this
engagement? Consider the following:
a) Changes in the users of the financial statements.
b) Known instances of management override of controls or lack of integrity.
c) Difficulties encountered on previous audit engagements.
d) High media interest in the entity or its management.
e) Negative industry trends and performance.
f) Changes in entity operations (systems, people, products, locations, etc.).
g) Expanded related-party transactions or unusual or highly complex transactions.
h) Deficiencies in the control environment.
i) Breaches in industry laws/regulations that would result in material fines or penalties. j)
Potential scope limitations.
Doubts about entitys ability to continue in existence.
Need for specialized audit resources (industry/computer/accounting specialists, etc.).
m) Unwillingness or inability to pay a fair fee (also any unpaid fees).
Comments:

(Note: Record details of any risk factors identified on Forms 520/522.)

Yes/No (plus initials and date)

Firm competencies

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Existing engagement Continuance 410

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3.

Does the firm have the necessary resources available to complete the engagement?
Consider:
Availability of firm personnel with:

Appropriate level of experience for this

engagement;
Relevant industry and subject matter
knowledge; and Required regulatory and reporting
experience.
Availability of staff/resources to complete engagement within the reporting deadline.
Availability of external auditor experts (those with expertise in fields other than accounting or
auditing) as required.
Availability of an EQCR where required by firm policies.
Comments:

Independence prohibitions

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4. Are we satisfied there are no existing prohibitions that would preclude the firm or any staff
member from performing the engagement? Address each of the following prohibitions listed
below:
a) Financial interests in entity.
b) Loans and guarantees to/from client.
c) Close business relationships with client.
d) Family and personal relationships with client.
e) Future or recent employment with entity serving as officer, director or company
secretary of client.
f) Provision of non-assurance services such as corporate finance or legal services that
involve dispute resolution.
g) Performance of management functions for the client.
h) Making journal entries or accounting classifications without first obtaining
managements approval.
i) Acceptance of gifts or hospitality from client (other than clearly insignificant).
j) Fee quote that is considerably less than market price for the engagement. k)
Provision of legal services.
Preparation of source documentation.
m) Provision of corporate finance services.
Comments:

(Note: Note that additional independence prohibitions (not addressed here) apply to assurance
engagements for listed entities.)
Independence threats
5.

Are we satisfied there are no significant threats to independence? Address each of the
following threats in relation to the firm and any member of the engagement team: a)
Self-interest (i.e., where loss of client fees would be material).
Self-review (i.e., the nature and extent of bookkeeping services required or where a judgment
from a previous engagement needs to be evaluated in reaching conclusions).
Advocacy (i.e., acting as an advocate on behalf of client in litigation or in share promotion).
Familiarity (i.e., being too sympathetic to the clients interests).
Intimidation (i.e., being deterred from acting objectively and exercising professional skepticism).
Threats identified and safeguards (if any) to reduce the threat to an acceptable level:

Yes/No (plus initials and date)

CPEM Forms Audits

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Existing engagement Continuance 410

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Engagement preconditions

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6.
Engagement preconditions
Is the financial reporting framework to be applied in the preparation of the financial statements
acceptable?
Has management acknowledged their understanding and responsibility for the following:
Preparation of financial statements in accordance with the applicable financial reporting
framework;
For such internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error; and
To provide the auditor with:
Access to all information relevant to the preparation of the financial statements,
Additional information we may request from management for the purpose of the audit, and
Unrestricted access to persons within the entity from whom we determine it necessary to obtain
audit evidence?
If the engagement is to be continued, has a signed engagement letter been obtained?

Conclusion
This engagement should be rated as follows: (circle one)
(Describe any changes in this assessment from prior periods.)
Low Risk

Moderate Risk

High Risk

Not Continued

Partner/Practitioner assessment
Comments:

I have read the responses to the questions above and:

Agree with the conclusion.
Declare that I am not aware of any other independence prohibitions, independence threats or
risk factors that would prevent the firm or any member of the engagement team from performing
this assignment.

Prepared by Date Reviewed by Date

CPEM Forms Audits

CPEM 2011

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