Initial audit engagements in Malta : an analysis

Abstract

Initial audit engagements entail a number of considerations not associated with recurring audits. These include communicating with the predecessor auditor, ascertaining the reliability of opening balances and the consistency of application of appropriate accounting policies, and assigning firm personnel. The process for gaining an understanding of the client and its business, making audit risk assessments and developing the audit approach is naturally more involved for new clients. In this light, the auditor should ensure that first-year procedures are adequately carried out and that the audit approach reflects appropriate risk assessments and an adequate understanding of the client and its environment. The main objectives of this study are to identify the manner in which initial audit engagements are arising, to analyse the procedures undertaken by the auditor during an initial audit and to distinguish between these procedures and those carried out in recurring engagements. In addition, other issues relevant to initial audit engagements are explored and, where possible recommendations are provided to address these issues.