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AA > 10. Audit Completion > Flashcards

10. Audit Completion Flashcards

1
Q

Completion: 2 checks during (partner) FS review

A
  1. Compliance check
  2. Sense check
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2
Q

Completion: FS review: Compliance check: Compliance with what?

A

With CA

Checklist should be used

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3
Q

Completion: FS review: Sense check

A

Do the FS make sense?

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4
Q

Completion: FS review: Sense check: What should be used?

A

Analytical procedures

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5
Q

Completion: FS review: Sense check: What APs shold be used?

A
  1. Interpretation
    Review the financial statements considering absolute figures and ratios
  2. Investigation
    Unusual movements or numbers should have been identified as audit risks so the answers to questions should be in the audit working papers
  3. Corroboration
    If answers cannot be found in the working papers then further work is required.
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6
Q

OBT: How are misstatements dealt with as a whole?

A

Accumulated

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7
Q

What should the auditor do with the misstatements?

A
  1. Inform management
  2. Reassess materiality
  3. Determine whether uncorrected misstatements are material, individually or in aggregate
  4. Seek written management representations to confirm that the effect of uncorrected misstatements is immaterial.
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8
Q

Can non-compulsory information contribute to material misstatement? (e.g. climate)

A

Yes (by nature)

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9
Q

OBT: Procedures if auditor didn’t audit prior year FS

A
  1. Agree brought forward figures to last year’s financial statements
  2. Assess accounting policies have been appropriately applied to opening balances
  3. Perform at least one of the following:
    a. review the previous auditor’s working papers
    b. consider whether this year’s audit tests provide evidence over opening balances
    c. perform specific procedures on opening balances.
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10
Q

What to do if last year’s financial statements contained a misstatement and the matter was unresolved?

A

Consider the need to modify this year’s audit opinion

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11
Q

When are FS not prepared on going concern basis?

A

Management intends to liquidate the company or to cease operations, or has no realistic alternative but to do so

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12
Q

Going concern: What should Ado if less then one year has been considered by mgmgt?

A

Ask to be extended

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13
Q

Should the A consider going concern at all stages of audit?

A

Yes

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14
Q

Going concern issues: Acceptance

A

Clients who are unlikely to continue in business will be classed as high risk and the firm must consider carefully if they wish to commit to such work

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15
Q

Climate issues affecting going concern examples

A

Bans on types of technology or energy used

An adverse weather event

Climate-related litigation changes.

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16
Q

Do auditors sign off the audit report some time after the accounting date?

A

Yes

So subsequent events should be considered

17
Q

The 2 types of subsequent event

A
  1. Adjusting
  2. Non-adjusting
18
Q

Going concern: Process for: Adjusting events

E.g.
Resolution of a court case
Major customer enters liquidation
Evidence of the NRV of inventory
Discovery of fraud or error

A
  1. Provide evidence of conditions existing at the date of the financial statements
  2. Adjust FS
19
Q

Going concern: Process for: Non-adjusting events

E.g.
Destruction of an asset by fire
Dividends declared after the year end
Announcement of plan to close part of the business

A
  1. Provide evidence of conditions arising after the date of the financial statements
  2. If material, disclose event
    (ONLY if going concern status
    affected)
20
Q

Does the auditor have an active duty to carry out audit procedures to identify events that require adjustment or disclosure in the financial statements?

A

Yes

Mgmnt representations all subsequent events adjusted/disclosed

21
Q

Does the A have to react to an event after sign-off?

A

Yes

If requires adjustment/disclosure

Should discuss with mgmnt and they should adjust if necessary

22
Q

Post sign-off events not amended by management?

A

Consider withdrawing audit report

23
Q

A wants to withdraw audit report and mgmnt continue distributing FS: What to do?

A

Take action. E.g.

  1. Seeking legal advice
  2. Using the right to speak at the AGM
  3. Considering resignation and calling an EGM
24
Q

When should the letter of rep be signed by directors?

A

BEFORE audit rpeort signed

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