S2 audit completion Flashcards
what is the basic approach to auditing
plan the audit
Know the client and business environment
Review of accounts
Identity areas of risk
Enquiry/document the accounting and information system
Analysis and audit testing
Audit completion
Audit reporting and audit opinion
Debrief and start planning
what additional issues affect FS
subsequent events
Provisions and contingencies
Evaluation of misstatements
Written representation by management
Audit documentation and final check
Going concern
what are subsequent events
events between date of FS and auditors report that come to auditors attention after the report
Adjust for those that provide evidence of conditions that existed at the date of FS
Non adjusting are those that provide evidence of conditions that arose after the date of FS - disclose
Need to be appropriately reflected in accordance with the applicable financial reporting framework
Up to date of audit report - Perform audit procedures to obtain evidence that subsequent events occurring between the date of the FS and report have been identified and adjustments or disclosures have been made
Between audit report and FS and afterwards - no obligation to perform any more procedures. Discuss facts with management and obtain written representation
what are provisions
liability of uncertain timing or amount
Recognised when: present obligation as a result of a past event with transfer of economic benefits that can be reliably estimated
what are contingent liabilities
possible obligation arising from past events and payment is not probable or amount cannot be measured reliably
If probable = not contingent, treat as provision
Neither probable not remote = disclose
Remote = do nothing
what are contingent assets
possible asset from past event
Probable = disclose
Neither probable nor remote = nothing
Remote = nothing
what is audit work
provisions and contingencies may become known through subsequent event auditing so management should be inquired
Current status of items accounted for
New commitments or borrowings
Planned or actual sales or capital
Destruction of assets
Developments in contingencies
what are misstatements
factual - no doubt
Judgement - unreasonable management judgement
Projected - protection of misstatement identified in audit samples to the populations from which the samples were drawn
what are audit requirements for misstatements
Keep a record of errors
Are changes needed to FS
Revisit scope of audit work done
Do some matters need to be raised with third parties
Obtain written representation
what is written representation
management believe that they have fulfilled their responsibility - preparation of FS and providing access to information
Supports audit evidece
Auditor to respond appropriately
Should cover all periods referred to in audit report
what is audit documentation
evidence that audit was planned and performed in accordance with framework
Increase efficiency and effectiveness
Needs to be sufficient for an experienced auditor to understand
Nature, timing, extent
Results
Significant matters arising
Assembly of final audit file
what is final review and what is recorded
all routine matters dealt with
Important matters covered
FS reviewed
Record:
Results of analytical review
Conclusions on FS headings
Memorandum on major account headings
Whether evidence recorded supports conclusions
Management letter of representation
what might cast doubt on GC
obtain sufficient evidence if managements use of GC concept is appropriate
Is there a material uncertainty
Cast doubt on GC:
Financial events
Operating events
Other events
what is done if events are found which might threaten GC
Analyse forecasts and interim FS
Look at loan covenants
Review minutes
Review plans for unfilled orders
Scrutinise subsequent events
Are disclosures appropriate
