Assurance - Concluding & Reporting - Procedures

Question 1

What are the types of misstatement?

Answer 1

The misstatement is the difference between the amount, classification, presentation, and disclosure of what reporting on F/S
Types:
Factual - There is a misstatement that is in doubt
Projected - misstatements that are derived from the auditor’s best estimates
Judgemental - These are misstatements that arise from accounting estimates or select applicable accounting policies that the auditor considers.

Question 2

What CAS is used for the misstatement with TCWG

Answer 2

CAS 450 - if management is not unwilling to correct the statement, then the auditor needs to bring the misstatement to the attention of TCWG
- Not correct, and talked to TCWG, the auditor must consider providing a modification of the auditor’s opinion based on materiality pervasiveness

• Misstatement arising from fraud - suspected or affect the instance of fraud, the auditor should also consider professional and legal responsibilities

Question 3

What completion procedures are to be used

Answer 3

1. Subsequent event (CAS 560)
2. Communication with lawyers (CAS 501 Audit Evidence, Specific consideration for selected item)
3. Obtaining management representation ( CAS 580 Written Presentation)
4. Reassessment of going concern status ( CAS 570 Going concern)

Question 4

What are the two types of subsequent events

Answer 4

Type 1 subsequent event - Event that provides evidence of a condition that existed at the F/S date
Type 2 subsequent event - Event that provides evidence of a condition that arises after the F/S date

Event between the date of F/S and the audit report sign is a type 2 non-adjusting disclosures
- Audit report sign and audited financial statement to the public - No obligation to gather evidence for event occurs if it becomes aware after the report
Time frame after audited F/S - No obligation to gather evidence for events that occur after F/S

Question 5

What is included with the communication with lawyers and management written representation

Answer 5

For CAS 501 - Audit evidence “Some item a letter of inquiry would include are:
1. A request for law firm to list to list the companies that are related to the auditee
2. List the outstanding claims for possible claims where the law firm represented the auditee
3. DEscription of the nature and current status of each claim

Management representation
- Management written representation - part of audit evidence is to gather the evidence for procedures that management has fulfilled its responsibilities without asking management

Question 6

What CAS standard is used for procedures and explain what is included

Answer 6

CAS 580 - provides written representation for the auditor to obtain such as management and where appropriate, TWCG have fulfilled their responsibilities and support other audit evidence or specific assertion

Question 7

What is included in the management representation letter

Answer 7

1. Management responsibilities
   - Description of responsibilities of the F/S
   - REpresetnation that management has fulfilled its responsibilities and provided all information to auditors and access
2. Required representation from specific audit standard
   - Method, significant assumption, and data used in making accounting estimates are reasonable
   - Related party transactions are appropriately accounted for and disclosed in F/S
   - Management responsibility for fraud has been acknowledged risk assessment has been performed
   - Subsequent events that require adjustment or disclosure have been appropriately accounted for (CAS 560)
3. Representation to support other audit evidence obtained during the audit of F/S

Question 8

What documentation is needed to include for the reporting phase

Answer 8

• Auditor cannot demonstrate that they have obtained sufficient appropriate evidence to support their audit, and opinion and complied with CAS and is applicable legal and regulatory requirement