Chapter 12 - Completion Stages

Question 1

Disclosure checklist

Answer 1

Questions will ask the auditor a series of questions prior to issuing an audit opinion.
Ensure necessary disclosures have been made.

Question 2

Analytical procedures

Answer 2

Performed at completion stage as figures may have changed from planning. Also gives auditor chance to explain fluctuations in the FS.
If they can not explain the fluctuations then they haven’t done sufficient work.

Question 3

Subsequent events

Answer 3

Have an active duty the look for Adjusting events and non adjusting events.
Adjusting events - evidence occurred in the year.
Non - occurred after the year end

If non impacts the company as a going concern then it will need to be adjusted.
If material then disclosed in FS

Question 4

How do auditors carry out subsequent events

Answer 4

Post year end nominal
Inventory testing 
Post year end board minutes 
Post year end management accounts
Outside information eg. Newspapers

Question 5

Going concern

Answer 5

Means it is believed the company will continue business for the foreseeable future (12 months)
If not then accounts prepared on the break up basis:
All assets valued and quick sale cost
No assets and liabilities in non current.
Provision for extra costs eg redundancies.

Up to director to decide what was the accounts are prepared but audit will have to agree.

Question 6

Written representation for areas with little audit evidence.

Answer 6

Letter written to the client on there headed paper, signed and agreed matters such as:

Directors prepared accounts
Directors have informed us of any fraud
Informed us of all related party transactions