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Audit > L3 > Flashcards

L3 Flashcards

1
Q

purpose of audit report

A
  1. auditors commincate their views on accounts in audit report
  2. if they agree= unqaulifed
  3. if they dont agree= qualifeid
  4. stands require auditors to give reasonable assurance
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2
Q

True and fair framework

A

maybe neccessary to provide addit disclosures than those required by framework
or necessary to depart from framework

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3
Q

Auditor report ISA 700- subject

ISA 700

A
  1. Title
  2. addresse
  3. opinion
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4
Q

Opinion

ISA 700

A

identify whether fs has been audited and whos

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5
Q

Basis of opinion- think requirements it must fill

ISA 700

A
  • accord with ISA and applicable law
  • statement that auditor is independent
  • states whether the audit evidence obtained is sufficient and appropriate
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6
Q

Going concern ISA

ISA 700

A

Auditor agrees with how managment has made the statements

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7
Q

Key Audit matters applies to

ISA 700

A

Listed entities
public interest entities
those who voluntarily apply UK corporate goverenace Code
required by law

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8
Q

Auditors responbility for fs
main objective

ISA 700

A

obtain reasonable assurance whether fs
* as a whole, are free from material misstatement whether due to fruad or error

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9
Q

material misstatement- defo

A

basically if it can influence a person/entity econ decsion

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10
Q

TCWG

A

Those Charged With Goverance

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11
Q

auditors report final (Sign)

A

Name of Engagement Partner
Signature of auditor
Auditors address
date of report signoff

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12
Q

Key Audit Matters ISA 701

A

Aim= improve transparecny
basically shows that in the auditors opinion these werer the areas that were most significant in the fs
* are communicated with TCWG

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13
Q

KAM selctions

A
  1. areas of high risk
  2. judgements, management and auditors including estimates- high degree of guess that is uncertain
  3. effect of significant events or transactions in the period
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14
Q

KAM paragraph

A

refer to any related disc
why the matter was condsidered KAM
how matter was addressed

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15
Q

KAM

A

Key audit matters

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16
Q

Misstatments

A

difference between the reported amount, classification, presntation or diclosure of fs item and the actual.

17
Q

Types of Misstatements

A
  1. Factual- no doubt about
  2. Judgemental- difference arrising from judge of manage
  3. projected- auditors best estimate of the misstatment in population
17
Q

What management will do with misstatements

A

make changes
or
dont make changes

17
Q

forming an opinion pt2- auditor will evalaute whethere

A
  • appriprate disclosure with the accounting policies-
  • accounting estimates and related disclos made by manage are resonable
  • info presented in fs is relevant, reliable, comparable, understanble
  • fs provide enough disc to allow users to understand the info
  • termnology used is apprpriate
17
Q

Forming an opinion

A

clear expression
consideration with
1. sufficent appropriate audit evid
2. uncorrected misstatements that are material
3. true and fair view- FS and framework
4. all fs has been preped in all material respects in accord with the framework and applicable law

18
Q

Pervasive

A

relates to misstatments that are prelevant in fs- affects acc and relaiblity of fs
* not confined to spec element- multiple fs
* if confined- will still effect the FS
* with disclosure are fundamental to the user understanding the fs- affects disclosure part and this hurts understanding

19
Q

Material, but not pervasive and with enough evidence

A

Qualified expect for

20
Q

Material, but not Pervasive and not enough evidence

A

Qualifed except for

21
Q

Material and Pervasive, w evidence

A

Adverse

22
Q

Material and Pervasive, with not enough evidence

A

Disclaimer

23
Q

Qualified opinion

A

Generally accurate, but some of fs is not clear, so unable to give Unqualifed

24
Q

Qualified Expect for

A

besides a particualr part the FS is generally fair and true:
1. fair presentation framework- except for specfic issue, the FS fairly represnets the entities financial situation and performance
2. complaince framework- apart from the issue, the FS has been preped in accord with the requir of financial reporting framework

25
Q

Adverse

A

have obtained sufficent appropriate evidence that sats the misstatements are both materual and pervasive
dont fairly represent

26
Q

Disclaimer not enough evidence

A

auditor says the possible effects on fs could be both material and pervasive

no opinion

27
Q

Disclaimer with enough evidence

A

auditor says with having colleceted sufficient and appropriate evidence, that its not possible to form an option due to uncertainty that they effect the fs

28
Q

How does an adverse opinion come about

A
  • use of inappropriate accounting basis
  • disagreement with client as to facts or amounts
  • non-compliance with relevant legislation
29
Q

if opinion is not unqualifed- layout

A

appropriate heading- basis for opinion
material misstatement
1. specified amount
2. narrative disc
3. non-disc of info= discuss with mangement, describe nature of info

30
Q

Emphasis of Matter 706

A

paragraph in auditors reports
refers to matter appropriately presented or disclosed in fs
affects the understanding of the fs

31
Q

Other Matters

A

if auditor believes import info not disclosed, but is required to understand statements, then if not banned by law, they will include in this paragraph.

32
Q

communication with management

A

raise awareness of any issues
opp to seek clarification
law may restrict communication
conflict- condientaily/obligation to communcate get legal advice

33
Q

Can a company depart from accounting standards

A

yes on the basis of truth and fairness

Audit (12 decks)

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