Chapter 11 - Finishing the Audit Flashcards
what occurs during the beginning of the year?
interim testing
interim testing includes..
test of controls and substantive procedures
what occurs at year end?
going concern review, adjusting JE, review subsequent events substantive procedures
roll forward procedures:
extended work from intern period to date of financial statement s
roll forward procedures include…
both substantive and test of controls
roll forward procedures are performed…
following the date of FS
idea of roll forward is to…
obtain evidence through the date of FS
roll forward usually changes method for _____ risk areas
low
there is a high level of analytical procedure at…
year end
analytical procedures are required at…
interim testing and year end
near the end of the audit, analytical procedures identify…
unusual or unexpected relationships not previously identified
analytical procedures:
study of relationships between financial and non financial data
analytical procedures review accounts for…
“miscellaneous”, “other,” and “cleaning” accounts
accounting estimates review…
managements process for developing estimates and the reasonableness
to audit accounting estimates, we must…
have a high understanding of management
flow of attorney letter
- auditors request from client
- audit mails it
- attorney replies
attorney letters can come from both…
internal and external lawyers
written representative are provided by _____ to ____
management; auditor
WR are dated using…
date of auditors reports (audit completion date)
broad purposes of WR
- impress on management their responsibility for FS
- may establish auditors defense if a question related to inquiries subsequently arises
what happens if WR is not provided?
qualify or disclaim opinion
3 major parts of WR
- info related to FS
- info provided to auditors by management
- IC over financial reporting (public)
what is included in the info related to FS section of WR?
- management responsibility for FS and IC over FR
- appropriate disclosure, presentation, and reasonableness of items
- statement that uncorrected misstatements are immaterial
if concerns for going concern do not remain…
do nothing
if concerns for going concern continue…
disclose in FS and modify report
accumulate $ effect of…
identified misstatements
2 methods for evaluating materiallity
roll over, iron curtain
rollover method considers…
just the current period
iron curtain method considers..
aggregate effect of the adjustments on the BS
audit supervisor asks…
have all the steps been performed?
is referencing clean?
are explanations understandable?
manger/partener ask..
is the overall scope adequate?
do overall conclusions support the opinion?
reviewing partner asks…
is quality consistent with firm?
engagement quality review
pushing back date of FS increases…
liability
procedures following audit report release date
- omitted procedures
- communication with those charged with governance
- management letters
perform omitted procedures if..
they are important and individuals are currently relying on that info
no further action is neccessey for omitted procedures if…
previous opinion is supported
with omitted procedures, if previous opinion cannot be supported…
withdraw original report, issue revised reports, inform persons relying on FS
what needs to be communicated with individuals charged with governance?
significant Ic deficiencies and material weakness
for public companies, communication to governance must be…
before audit report date
for non public companies, communication to governance must be..
within 60 days after audit report date
management letters are from ____ to _____
auditor to management
are management letters required?
no
management letters are prepared as a by-product of…
procedures performed in audit
management letter provide…
recommendation to client for improving effectiveness and efficiency of operations
