1. The First Standard of Field Work

   "The work is to be adequately planned and assistants,if any, are to be properly supervised."

2. Establishing an Underatanding with the Client(SAS 83,89)
3. Enagagement Letter(CPA To Audit Commitee)

   This is not required by GAAP,but recommended.

   1. the periods
   2. assurance that the audit will be performed in accordance with GAAS
   3. any assistance to be rendered by client personnel
   4. management's responsibility for preparing the financial statements
   5. fee basis

Before the successor accepts the engagements
• Inquiry
  • the integrity of management
  • disagreements between the predecessor and management on accounting principles,auditing procedures or othe r significant matters
  • the predecessor's understaning about why there was change in auditors
  • predecessor communications to audi committees regarding internal control related matters

Misstatement
• Misapplies GAAP
• Omits necessary information
• Departs from fact

Audit Risk = Inherent Risk*Control Risk*Detection Risk
These risks influence nature , timing and extent of substantive test.

[AU316]An audit should be planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatement,whether caused by error or fraud.

Fraud(AU316)
1. fraudulent financial reporting
2. misappropriation of assets

Professional skepticism is an attitude that includes a questioning from fraud.

Disclosure of possible fraud to parties other than the client's senior managements and its audit comittee ordinarily is no part of the auditor' responsibility.

Discoverry of an illegal act,in and of itself,does not necessitate withdrawral,regardless of the source of client financial resources.

• Unauthorized or improperly recorded transactions
• Investingation by a governmental agency
• Large payments for unspecified services to consultants
• Excessive sales commissions or agents' fees
• Unusually large cash payments
• Unexplained payments to government officials or employees
• Failure to file tax returns
• Forced to discontinue operations in foreign country