Process Of Assurance: Evidence And Reporting

Question 1

ISA (UK) 500: Evidence must me…

Answer 1

1. Sufficient (quantity)
2. Appropriate (quality)

Question 2

Sufficient evidence depends on factors like…

Answer 2

Risk
Materiality
Level of assurance to be given

Question 3

Appropriate evidence factors

Answer 3

1. Reliability
2. Relevance

Question 4

Reliable evidence two factors

Answer 4

1. Source
2. Format

Question 5

Relevant evidence

Answer 5

Proves a FS assertion

Or multiple

Question 6

ISA (UK) 315 financial statement assertions about classes of transactions and events, and related disclosures, for the period under audit

Answer 6

1. Occurrence
2. Completeness
3. Accuracy
4. Cut-off
5. Classification
6. Presentation

Related to transactions

Question 7

Occurrence

Answer 7

Transactions that have been recorded:

Have occurred
Pertain to the entity

Question 8

Completeness

Answer 8

All transactions have been recorded
(That should have been recorded)

Question 9

Accuracy

Answer 9

Amounts recorded APPROPRIATELY

Question 10

Cut-off

Answer 10

Recorded in correct accounting period

Question 11

Classification

Answer 11

Recorded in proper accounts

Question 12

Presentation

Answer 12

Transactions and events:
1. Appropriately aggregated
2. Clearly described

Related disclosures are:
1. relevant
2. understandable

Question 13

ISA (UK) 315 assertions about account balances and related disclosures, at the period end

Answer 13

1. Existence
2. Rights and obligations
3. Completeness
4. Accuracy, valuation and allocation
5. Classification
6. Presentation

Related to assets, liabilities and equity

Question 14

Existence

Answer 14

Assets, liabilities and equity interest exist

Question 15

Rights and obligations

Answer 15

The entity owns the assets
The liabilities are the entity’s obligations

Question 16

Audit approach: two types of test

Answer 16

1. Tests of control
2. Substantive testing

Question 17

Tests of control

Answer 17

Testing the system that gets the numbers into the financial statements

Question 18

Tests of control procedures include

Answer 18

Enquiry

Observation

Reperformance

Data analytics

Question 19

When are Tests of control appropriate

Answer 19

When control risk is low

Tests of control more efficient to gather evidence

Question 20

Why can’t the auditor just carry out tests of control?

Answer 20

Inherent limitations of controls

Question 21

Substantive testing

Answer 21

Test the numbers in the financial statements

Question 22

Substantive procedures include

Answer 22

Analytical procedures

Tests of detail

Question 23

When must substantive procedures must always be carried out?

Answer 23

On material items

Question 24

Testing: Step one

Answer 24

Preliminary assessment of internal controls, including walkthrough tests

Question 25

Preliminary assessment of internal controls, including walkthrough tests: Question

Answer 25

Do you expect controls to be effective?

Question 26

What to do if controls expected to be effective?

Answer 26

Tests of controls

Question 27

What to do if controls aren’t expected to be effective?

Answer 27

Substantive testing

Question 28

What to do if tests of controls found to be effective?

Answer 28

Limited substantive testing

Question 29

Evaluating results: Basic criteria

Answer 29

1. Relevant
2. Reliable
   E.g. doubts over management integrity
   discrepancies between evidence sources
3. Sufficient

Question 30

Relevance

Answer 30

Audit evidence supporting all FS assertions for a given account balance

Question 31

What to do if evidence not sufficient?

Answer 31

Attempt to find further evidence

Consider implications for the audit opinion

Question 32

Express auditor opinions

Answer 32

1. Opinions on FS
2. Opinions on other matters prescribed by CA06

Must always be stated

Question 33

Opinions on FS

Answer 33

1. True and fair
2. Properly prepared in accordance with CA06/Standards

Question 34

Opinion on other matters prescribed by CA06

Answer 34

Info in D’s report and strategic report consistent with FS

Question 35

Implied opinions only required when

Answer 35

Material problem arises

(Though best practice to mention regardless)

Question 36

Implied opinions matters:

Answer 36

1. Returns: Adequate for audit not received from branches not visited
2. Accounts: Don’t agree to underlying accounting records
3. Proper: (Adequate) accounting records not kept
4. Information: And explanations required for audit not received
5. Directors’ remuneration: Disclosures required by law not made

Question 37

Auditor’s report format

Answer 37

Title
Adresse
Auditors opinion on FS
Basis for opinion
Going concern
Key audit matters (listed Cs)
Other information
Management responsibilities
Auditor responsibilities
Explanation of extent audit capable of detecting irregularities (incl fraud)
Opinion on other matters
E.g. whether D’s R and SR consistent with FS
Matters on which the auditor is required to report on by exception under CA
Name and signature of engagement partner
Auditor’s address
Date of report

Question 38

When will auditor’s report wording need to be modified?

Answer 38

1. Material misstatements
2. Insufficient appropriate evidence

Question 39

UK Governance code Key Audit Matters sections

Answer 39

{Rubbish Audit Matters Sections}

1. Assessment of RISKS of material misstatement
2. APPLICATION of MATERIALITY
3. Overview of SCOPE

Question 40

One benefit of longer-form auditors reports?

Answer 40

Closing expectations gap

Question 41

Non-audit assurance report (ISAES/ISREs) sections

Answer 41

Title
Addressee
Identification and description of subject matter
Identification of criteria
Inherent limitations
Restrictions upon purpose/user
Identifying responsible party
Work performed in accordance with relevant standards
Summary of work
Conclusion
Date
Name of firm/practitioner