7: completion

Question 1

Three steps for carrying out analytical procedures at completion to check they make sense

Answer 1

Interpretation: absolute figures and ratios for the message within the FS

Investigation: review will expect to find answers to issues raised on the audit file

Corroboration: further work if necessary

Question 2

4 Misstatements that are material even if below materiality

Answer 2

Non-compliance with regulatory requirements

Masking a change in trends or affecting ratios

Increasing management compensation

Affecting other information in documents included with the audited FS

Question 3

3 steps to obtain sufficient appropriate audit evidence about opening balances

Answer 3

1. Determining whether they’ve been correctly bought forward or restated
2. Determining whether they reflect the application of appropriate accounting policies
3. Performing one or more of the following:

Reviewing the PY audit file

Evaluate if CY gives evidence to opening balances

Performing specific audit procedures (checking receipts, verifying payables, reconciling inventory, 3rd party confirmations etc.)

Question 4

4 steps to assess going concern (ISA 570)

Answer 4

1. Check for indicators
2. Review of future plans eg financial forecasts
3. Review of borrowing facilities eg borrowing conditions and covenants
4. Review of minutes and other information for possible problems

Question 5

4 other steps auditors have to do when assessing going concern

Answer 5

Discuss with client management

Test assumptions

Obtain written representations from management about future intentions

Review disclosures