Introductory Case

Exercise 1

To: DeAnna Malott

From:
Date:
Re: Quality Control Standards at Abernethy and Chapman

Overview: [Give a brief overview of the procedures that you performed]

Evaluation: [Complete the table below]

Standard Existing Procedures Recommendations Additional Information Needed

Leadership the partners head the engagement
responsibilities team and supervise the audit system
Relevant ethical The firm has a policy that requires all
requirements employees to sever all financial ties to
audit clients.
Acceptance and Firm is engaging into new marketing
continuation of clients strategies like publishing
advertisements and periodicals to
attract more clients
Human resources the firm has policies in hiring
professional such as :
college graduate major in accounting ,
,and with the license of certified public
accountant.
once employed, must complete
40hours of continuing education.
According to PSQC 1 the firm shall
establish policies and procedures
designed to promote an internal culture
recognizing that quality is essential in
performing engagements.
according to PSQC 1, The employees
are not required to sever all ties but
instead are to identify and evaluate
relationship that create threats to
independence to an acceptable level
the firm must consider the integrity of
the client, and does not have
information that would lead it to
conclude that the client lacks integrity.
firm ought to consider changing its
methodology to determine which kind
of training they require for the forty
hour rule.
in order to have quality-oriented
internal culture, all level of the firm's
management must give clear,
consistent and frequent actions and
messages.
if there are threats , firm should take
appropriate actions to eliminate or
reduce those threats by applying
safeguard. For example, the audit team
that handles certain client should be
shifted from time to time.
the firm should seek information from
predecessor auditor if the client permits
to do so.
The firm might need to set up a
framework in which specialized
evaluations can be done after every
engagement.
 and the promotions are guided by
seniority-at 2years, and technical
competence- performance.

Engagement
performance a consulting partner is required on
each engagement to supervise and to
ensure that there is complet objectivity
and competence in conducting each
audit.
The firm shall establish policies and
procedures designed to provide it with
reasonable assurance that appropriate
consultation takes place on difficult or
contentious matters.
The firm shall establish policies and
procedures on documentation of the
engagement quality control review.

The firm shall establish a monitoring Appropriate documentation relating to

Monitoring deanna Mallott, a partner, monitors the process. monitoring
quality control standards and human
resources policies of the firm

Conclusion: [Give a brief summary of the conclusion that you have determined based upon your procedures
)