Revision Videos Flashcards
What layout would you do an audit opinion on audit report question in?
First state, if it is a inability to obtain sufficient information or if it’s materially misstated
And justify your answer
Then state, if it is material and gives a materiality
Then decide if it is pervasive and give a reason
Then give opinion
Then state you’d include a basis for “opinion” opinion paragraph
Then state that the paragraph would explain the reasoning for that opinion 
When would you use an emphasis of matter paragraph in an audit report
Either when break up basis is correctly disclosed, but you want to emphasise
Or when a contingent liability is correctly disclosed, but you want to emphasise it 
When would you have a unmodified opinion with a modified audit report?
When the accounts are true and fair, but additional paragraphs, such as emphasis of matter, has been added
When would you use an other information paragraphs in an auditors report
When you want to identify an issue in the other information contained in the financial reports, i.e. the Chairmans report, but it isn’t in the financial statements. 
Do you have to include an opinion on other matters prescribed by the companies act paragraph in an auditors report 
Yes, you have to identify that there is all there are no issues in the directors or strategic reports, for instance, if they are consistent or inconsistent with the financial statements 
When is reporting by exception required by the companies act in an auditors report
Statements have been identified in the directors report or the strategic report
Adequate accounting records were not kept
Returns adequate for the audit have not been received from branch is not visited
Financial statements do not agree with accounting records.
Disclosures RE, directors remuneration have not been made
All information and exclamations has not been received
What is a disclaimer of opinion used for in an audit report?
When the lack of evidence has caused pervasive affect

How would you complete analytical procedures on payroll?
Find the average pay last year and the flex this to this years average employers.
Adjust for any pay increases
Check tax as percentage of gross pay
What internal controls would head office do for stores where cash and card sales are made and there is an automated system?
Budgetary control/comparison of actual to budget
On a store by store basis
Investigation of variances
Inter-store comparisons
Use of key performance indicators (KPIs)
Eg, margins, revenue per employee/floorspace
Store visits
On surprise basis:
* Checking compliance with standard procedures
* Confirm physical inventory agrees with records
* Differences investigated
* Cash counts
* To confirm amounts agree with point of sale (POS) records
* Differences investigated
Agree POS records to amounts banked:
* Differences between POS records and bankings investigated
* Delays in banking investigated
Review of exception reports:
* Slow moving inventory
* Difference between book and actual/review of inventory count results
* Level of refunds
Review of computer usage to monitor changing of passwords/failed access to system
Rigorous HR procedures/disciplinary procedures
Staff references/training/evaluation/employee verification procedures
Factors to consider whether to rely on written rep stating cash sales are complete
- Internal controls in place over cash sales/segregation of duties
- Whether independent analytical review of GP%/reconciliations
- Whether GP% in line with industry sector
- Integrity/attitude of MD/well informed
- Lifestyle of MD in relation to stated income
- Whether audit testing consistent with representations
During the audit of Poplar Ltd for the year ended 31 January 20X3 you have been assigned the responsibility of checking the cash at bank figure in the statement of financial position.
While checking the bank reconciliation you discovered that receipts from customers, listed as outstanding lodgements at the year end, were cleared through the bank on 14 February 20X3.
Requirement
Explain why this matter should be investigated further
- Cash book may have been left open after year end (inappropriate cut-off)/overstatement of
cash/impact on trade receivables collection period - Management to be informed of delay in banking
– Poor cash management/cash flow
– Teeming and lading
If directors report is inconsistent how does the audit report change
Describe the inconsistency in the ‘Opinion on other matters prescribed by the Companies Act 2006 section’ of the auditor’s report
* Auditors are also required to include a section headed “Matters on which we are required to report by exception”
