Module 18 EXPAND Flashcards
With regards to materiality, At completion the auditor will?
Calculate reporting materiality based on final financial statement figure
Evaluate whether sufficient, appropriate evidence gathered
Evaluate effect of unadjusted misstatements
With regards to going concern, at completion the auditor will?
Evaluate directors assessment of entity’s ability to continue as a going concern- including whether any material uncertainties exist
Consider impact of this on audit report
In terms of overall analytical review, at completion the audit will determine
Whether statements are consistent with understanding of the entity
No obvious inconsistencies with evidence and final statements
At completion the auditor will obtain written representations:
That those charged with governance acknowledge their collective responsibilities
- Required by ISAs
- to support other audit evidence
Impact of auditor judging that going concern applied correctly and no material uncertainties exist?
Give true and fair view
Impact of going concern not applied correctly
Don’t show true and fair view
Adverse opinion
Impact of auditor judging that a material uncertainty exists in relation to going concern
Should be disclosed in statements
If discloses - true and fair
If inadequately disclosed or omitted - adverse opinion
Directors responsibility in relation to going concern?
Assessment
Disclose material uncertainties
If prepared statements on a going concern basis of accounting
Auditors responsibilities in relation to going concern?
Obtaining sufficient evidence and concluding on appropriateness of management use of going concern basis
Concluding on whether material uncertainty exists
Compare assessment with directors
What is reporting materiality?
The final overall materiality level calculated at completion stage using finalised numbers
