Class 5 - Closing and Conclusions

Question 1

Substantive procedures related to the financial statement closing process

Answer 1

agreeing or reconciling the financial statements with the underlying accounting records

examining material journal entries and other adjustments made during the course of preparing the financial statements

Question 2

Substantive procedures responsive to significant risks

Answer 2

if the auditor determined that an assessed risk of material misstatement at the assertion level is a significant risk the auditor shall perform specific substantive procedures.

Question 3

adequacy of presentation and disclosure

Answer 3

the auditor should perform audit procedures to evaluate whether the overall presentation of the financial statements including the disclosures is in accordance with the applicable financial reporting framework

Question 4

evaluating the sufficiency and appropriatness of audit evidence

Answer 4

concluded if there is sufficient and appropriate audit evidence and looking for more if necessary. if not possible to obtain sufficient and appropriate audit eidence the auditor shall express a qualified opinion or disclaim an opinion on the financial statements

Question 5

Documentation

Answer 5

overall responses to adress the assessed risks of material missatement at the financial statement and the nature, timin and extent of the further audit procedures performed

the linkage of those procedures with the assessed risks at the assertion level

result of the audit procedures incluing the conclusions where these are not even otherwise clear

Question 6

types of audit missatements

Answer 6

Factual - misstatements about which there is no doubt

Projected - auditor’s best estimate of misstatements in populations, involving the projection of misstatements identified in the audit samples to the entire populations from which the samples were drawn

Judgmental - Differences arising from the judgments of management concerning accounting estimates that the auditor considers unreasonable, or the selection or application of accounting policies that the auditor considers inappropriate

Question 7

Consideration of identified misstatements

Answer 7

if the agreggate of material misstatements approaches overall materiality there may be a greater then acceptably low level of risk that possible undetected misstatements when taken in agreggate of misstatements accumulated during the audit could exceed materiality

Question 8

Communication and correction misstatements

Answer 8

Auditor shall communicate to the managers the misstatemts found and wait for their reponse. managers will argue or change the financial statemts. in case of arguing the auditor shall take that reasoning into account to form the final opinion (if financial statements are free of material misstatement

Question 9

evaluatin the effect of uncorrected misstatements

Answer 9

the auditor shall consider the size and nature of the misstatements both in relation to particular classes of transactions, accounts balances or disclosures and the financial statements as a whole and the particular circumstances of their occurence

the effect of an uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures an the financial statemnts as a whole