W17 Completion and Review (2)

Question 1

What procedures must an auditor follow after their substantive testing before they can sign the auditors report

Answer 1

Subsequent events

Going concern

Overall review of the financial statements

Evaluation of misstatements

Written representations

Question 2

What is the overall review of the financial statements

Answer 2

Reviewing the financial statements
- Comply with accounting standards and local legislation disclosure requirements

• accounting policies are sufficiently disclosed

Performing analytical procedures
-to corroborate conclusions formed in the audit to see if f.s are consistent with the auditors understanding of the entity

Reviewing the aggregate of uncorrected misstatements
- to assess whether a material misstatement arises

Question 3

What is a supervisory review

Answer 3

Part of the overall review of audit evidence

performed by a senior member

This review includes consideration of whether:

• The work has been performed in accordance with professional standards and applicable legal and regulatory requirements
• Significant matters have been raised for further consideration

Question 4

Evaluation of misstatements

Answer 4

The auditor must consider the effect of misstatement on both the audit procedures performed and ultimately, if uncorrected, on the financial statements as a whole

auditor must accumulate a record of all identified misstatements, unless trivial

Question 5

Communication and correction of misstatements - management

Answer 5

Part of evaluation of misstatements

auditor must communicate the misstatement to management on a timely basis and request management to correct those misstatements

if corrected: auditor shall perform additional procedures to determine if misstatements remain

uncorrected: understand why not corrected and take it into account when evaluating if f.s are free from material misstatement and request written representation on why they believe the misstatement is immaterial

Question 6

Communication and correction of misstatements - those charged with governance

Answer 6

Part of evaluation of misstatements

the auditor must communicate the effect the uncorrected misstatements may have on the audit opinion and request them to be corrected.

also must request written representation from those charged with governance whether they believe the effects of the misstatement are immaterial

Question 7

What is the purpose of obtaining written representations

Answer 7

A representation to support other audit evidence may be appropriate where
more reliable forms of evidence are not available, particularly in relation to matters requiring management judgment or knowledge restricted to management

can act as a complement to existing audit evidence

Question 8

How are written representations obtained

Answer 8

A letter is drafted by the client addressed to the auditor signed by the client.

Must be signed by an appropriate senior member of client management with appropriate responsibilities for the financial statements.

must be obtained and signed before the auditors report is finalised