Question

When establishing an understanding with the entity regarding the terms of the engagement, all of the following should be discussed, except:

a) Responsibilities of the auditor
b) Management's responsibilities
c) Timing of audit procedures
d) Auditor's fee structure

Answer 1

The engagement terms with the entity should cover the responsibilities of the auditor, management's responsibilities, and the timing of audit procedures, but not the auditor's fee structure. Option d) is correct.

Step-by-step explanation:

When establishing an understanding with the entity regarding the terms of the engagement, all of the following should be discussed, except the auditor's fee structure. The subjects that should be covered in this discussion encompass the responsibilities of the auditor, management's responsibilities, and the timing of audit procedures. The fee structure, although important, is not typically part of the engagement terms that define the respective responsibilities and timing within the engagement itself. These discussions are critical to the proper execution of an audit and ensure that both the entity and the auditor have a clear understanding of their roles and the expected outcomes of the audit.