Chapter 11 - reporting

Question 1

True or False

A report to those charged with governance should be in writing?

Answer 1

True

Question 2

What might be included in a report to those charged with governance?

Answer 2

• responsibility of auditor in relation to the financial statements of audit
• an overview of the planned scope and timing of the audit
• significant findings from the audit

For listed clients also:
- Confirmation from audit team have complied with ethical requirements
- Declaration of matters that may have a bearing on independence including disclosure of fees received for non audit services from the client
- Detailed of safeguards applied

Question 3

Effective communication attributes

Answer 3

• Timely (see an error fix it immediately)
• Includes disclaimer ( eg. reliance only for management)
• Repeats unresolved previous year points
• Includes management comments
• Fulfils expectations of those charges with governance
• Included management comments
• Repeats unresolved previous year points

Question 4

Auditors must communicate significant deficiencies in internal control

Examples in determining if internal control deficiencies are significant are:

Answer 4

• Likelihood of material misstatements
• Susceptibility to loss or fraud
• Size of the item in the financial statements
• Volume of activity
• Importance of the controls to the financial reporting process

Question 5

A report charged to those with governance will include:

Answer 5

• A covering letter
• An appendix setting out deficiencies, consequences and recommendations

Question 6

other info on auditors report include

Answer 6

directors are responsible for the other information presented within the annual report

Question 7

what are key audit matters

Answer 7

Matters that the auditor judges to have had the work carried out and include the most significant assessed risks of material misstatement identified

• Auditor provides a description of each KAM setting out why the matter was considered to be significant and how it was addressed in the audit
• Include a summary of their responses/key observations
• Explain how the scope of their work addressed each KAM and was influenced by applying materiality