CPASolved.png
  • Home

  • Learning Resources

  • Forum

  • Reading List

  • About

  • Contact

  • Members

  • More

    Use tab to navigate through the menu items.
    To see this working, head to your live site.
    • Categories
    • All Posts
    • My Posts
    Wilson
    Aug 14, 2020

    Hello, What is the SIT-7 for engagement issues? What are engagement issues? Thanks

    in Audit and Assurance
    2 answers0 replies
    1
    CPA Solver
    Aug 23, 2020

    Hi Wilson, Thank you for your post.


    Engagement issues are things for an accountant/accounting firm to consider prior to undertaking an audit engagement with a client.


    While I'm not familiar with the "7", I believe SIT stands for Scope Limitation, Independence and Timeline. These are all issues to consider prior to accepting an audit engagement.


    Scope limitation: An auditor is unable to obtain sufficient evidence over prior year’s financials.


    Independence: There may not be a sufficiently arm's length relationship with the prior engagement partner. For example - perhaps an engagement partner used to be on the company's Board of Directors.


    Timeline: Is it possible to complete the audit within the desired time frame?


    These are all issue to consider prior to accepting an engagement. Hopefully someone else can clarify the "7" in SIT-7.


    Hope this helps!

    1
    CPA Solver
    Aug 26, 2020  ·  Edited: Aug 26, 2020

    Perhaps the "7" refers to the requirement for audit partners to rotate every 7 years? If the prior audit partner audited the company's books for more than seven years, this would also be considered an engagement issue, since the partner may no longer be considered to have a sufficiently arm's length/objective relationship with the client (i.e. they are too familiar with the client). In general, engagement issues are factors that may affect an auditor's ability to perform an objective and competent audit. All of the above (scope limitation, independence, timeline, and prior engagements greater than 7 years in length) would affect the auditor's ability to provide a competent audit. Note that the prospective engagement partner should also not be taking on an audit engagement for more than seven years - this is something to look for in any case scenario.

    2 comments

    Privacy Policy

    Terms of Use

    Disclaimer

    ©2019 Eve Moore

    Images from rawpixel.com

    • Facebook