1. a) What must an auditor do before accepting nomination as a companys new auditor?

b) Explain the purpose and typical contents of an engagement letter

c) What must an auditor do between appointment and commencing the first audit of a new client?

2. To comply with Auditing Standards, an auditor must obtain all evidence on every transaction and balance in order to prove whether or not each is correct.

State whether you agree or disagree with this statement, explaining the main reasons for your answer.

3. a) What are the key inherent risks in the following businesses?

i) A large publicly quoted retail company with 100 branches in the UK.

2. A privately owned manufacturing company of food products.

b) What controls could the Directors implement to mitigate those risks?

c) What work might the statutory auditor plan to undertake in response to those risks?

4. a) Differentiate between the Audit Risk approach and the Business Risk approach to an audit.

b) What factors gave rise to the development of the Business Risk Approach to audits?

c) How would an audit performed using the Business Risk Approach differ from one performed using the Audit Risk Approach?