Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

BUS273 - Audit & Assurance Services > Week 8 - Completion & Reporting > Flashcards

Week 8 - Completion & Reporting Flashcards

1
Q

what does the final review of FS consist of?

A

compliance check and sense check

  • compliance with laws & regulations
  • does everything in FS make sense
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

how are misstatements evaluated?

A
  • accumulate misstatements and assess if they’re material
  • inform management of misstatements
  • seek written representations from management to confirm that the uncorrected misstatements are immaterial
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

if opening balances are misstated…

A

the FS for the current year may also be misstated

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

if the auditor cannot gain certainty over the previous year’s closing balances…

A
  • agree the b/f figures to last year’s FS
  • assess accounting policies have been appropriately applied to opening balances
  • review previous auditor’s working papers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

who’s responsible for determining whether an entity is a going concern?

A

management

auditor’s responsibility is to assess whether this assumption is reasonable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

should going concern be considered at all stages of the audit?

A

yes

at acceptance, planning and reporting stage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

two types of subsequent events?

A

adjusting events

non adjusting events

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

adjusting events?

A

provides evidence of conditions at the date of the FS

FS should be adjusted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

non-adjusting events?

A

provides evidence of conditions arising after the date of the FS

if material, the event should be disclosed

adjust only if going concern is affected

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

examples of adjusting events?

A
  • resolution of a court case
  • inventory write down (NRV ovevalued)
  • discovery of fraud/error
  • customer goes into liquidation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

examples of non-adjusting events?

A
  • destruction of assets
  • dividends declared post year end
  • plans to close part of the business announcement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

auditor duty from y/e to sign off date?

A

active duty

  • perform audit procedures
  • ensure subsequent events have been appropriately accounted for
  • written reps that subsequent events have been disclosed
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

auditor responsibilities from sign off date to issuance of FS

A

passive duty

  • no obligation to perform procedures
  • discuss w/ management if they become aware of events which require adjustments
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

when should written representations be signed?

A

before the audit report is signed

provides assurance that management can attest to the information provided throughout the audit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

can you give an unmodified opinion without management written reps?

A

no

potentially a disclaimer of opinion (opinion cannot be given)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

TCWG?

A

includes directors of a company and audit committee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

what does an engagement letter outline for communication w/ TCWG?

A
  • the form which communications w/ TCWG will take
  • the appropriate persons to whom such communications will be made
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

which matters must be communicated to TCWG?

A
  • responsibilities of auditor in relation to FS
  • scope & timing of the audit
  • significant findings from the audit
  • matters relating to auditor independence
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

effective communication w/ TCWG must be…

A
  • timely
  • appropriate form and frequency
  • fulfils expectations
  • includes mgmg comments
  • includes disclaimer
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

must TCWG conversations be documented?

A

yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

how are deficiencies in internal controls communicated?

A

deficiency

consequence

recommendation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

which factors determine whether a deficiency is significant?

A
  • likelihood of MM
  • susceptibility to loss/fraud
  • size of item in FS
  • volume of activity
  • importance of control
23
Q

what does a report to TCWG include?

A
  • covering letter
  • appendix setting out deficiencies, consequences & recommendations
24
Q

two types of audit reports?

A

unmodified and modified report

25
Q

two types of modified reports?

A
  • modified opinion on FS
  • unmodified opinion on FS
26
Q

types of modified opinions on FS?

A
  • qualified
  • adverse
  • disclaimer
27
Q

types of modified audit reports with unmodified opinions?

A
  • other matter paragraph
  • emphasis of matter paragraph
28
Q

qualified?
adverse?
disclaimer?

A

qualified = isolated error
adverse = whole FS ruined
disclaimer = not enough info

29
Q

what’s included in the audit report?

A
  • title
  • to whom it’s addressed
  • audit opinion
  • basis for opinion
  • going concern
  • key audit matters
  • other information
  • mgmt & auditor responsibilities
  • opinion on other matters
  • signature of partner
  • date
  • bannerman paragraph
30
Q

bannerman paragraph?

A

extra paragraph in an audit report stating that they don’t accept responsibility to anyone

31
Q

key audit matters?

A

significant areas of the FS that the auditor worked heavily on throughout the audit

32
Q

auditor responsibilities relating to KAMs?

A
  • provide a description of each KAM
  • summarise responses in relation to the assessed risks
  • explain how each KAM was addressed by the scope of the work
33
Q

is reporting a KAM a substitute for giving a modified opinion?

A

no

34
Q

emphasis of matter paragraph

A
  • applies to something in the financial statements
  • purpose is to emphasise an element in the FS
  • to divert users’ attention to an area in FS
35
Q

what does an EOM paragraph include?

A
  • titled ‘EOM’
  • describes the matter
  • state that opinion isn’t modified in this respect
36
Q

examples of scenarios where an EOM may be used?

A
  • material uncertainty e.g., regarding litigation
  • major catastrophe having an impact on the SOFP
37
Q

other matter paragraph

A

used to highlight a matter not in FS

38
Q

what’s included in other matter paragraph?

A
  • titled ‘other matter’ paragraph
  • describe the matter
39
Q

material?

A

an error or omission that influences the economic decision of users

can be by size or nature

40
Q

material and pervasive?

A
  • not confined to one area of the FS
  • represents a substantial proportion of the FS
  • fundamental to users’ understanding
41
Q

FS have a MM and it’s pervasive?

FS have a MM?

A

MM & pervasive = adverse (do not give a true & fair view)

MM = qualified (except for)

42
Q

inability to obtain evidence - material?

inability to obtain evidence - material & pervasive?

A

material = qualified (except for)

material & pervasive = disclaimer of opinion (we do not express an opinion)

43
Q

examples of what other information may include?

A
  • director’s report
  • chairman’s statement
  • corporate governance statement
  • sustainability statement
  • internal control / risk assessment
44
Q

if the auditor identifies inconsistencies between other info & FS…

A

discuss w/ management

conclude whether a MM exists in either the FS or OI

45
Q

if MM is in FS…

A

ask mgmt to correct FS

if no correction is made, consider impact on auditor’s report

46
Q

if MM is in OI…

A
  • ask mgmt to correct OI
  • if they fail to do so, use OI section to describe the uncorrected misstatement
47
Q

how do you address questions on audit opinions?

A

what is the opinion

what is the wording

paragraph for basis of opinion

48
Q

when company is a going concern and there are no material uncertainties regarding going concern?

A

unmodified opinion

include ‘conclusions relating to going concern’ section

49
Q

company isn’t a going concern, but directors have prepared FS on going concern basis?

A

material & pervasive misstatement

don’t include conclusions relating to going concern section

instead, issue adverse opinion

50
Q

company isn’t a going concern

directors have prepared FS on break-up basis with adequate disclosure of basis of preparation

A

FS aren’t misstated

don’t include ‘conclusions relating to going concern’ section

unmodified opinion

emphasis of matter paragraph used to highlight
- alternative basis of preparation
- reasons for doing so
- the disclosure
to the users of the FS

51
Q

going concern status is uncertain and directors have made adequate disclosure of the uncertainty

A

FS aren’t misstated

don’t include ‘conclusions relating to going concern’ section

unmodified opinion

include ‘material uncertainty related to going concern’ section to
- draw attention to the disclosure note
- state that opinion isn’t modified
- state that material uncertainty may cast significant doubt on entity’s going concern

52
Q

going concern status is uncertain and director’s haven’t made adequate disclosure of the uncertainty

A

FS are misstated

don’t include ‘conclusions relating to going concern’ section

could be considered material or material and pervasive

qualified / adverse opinion

explain in the ‘basis for qualified/adverse opinion’ paragraph

53
Q

what must be done to the auditor’s report when a special purpose FR framework is used? e.g., tax basis, cash basis etc

A

auditor’s report should include an emphasis of matter paragraph highlighting the use of the special purpose framework

BUS273 - Audit & Assurance Services (24 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions