Topic 9 - Part 1 Completion and Review Flashcards Preview

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Flashcards in Topic 9 - Part 1 Completion and Review Deck (18)
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1
Q

what are Subsequent Events?

A

“Subsequent events means events occurring
between the date of the financial report
and the date of the auditor’s report, and
facts that became known to the auditor
after the date of the auditor’s report.”

2
Q

what is considered to be period 1?

A

period between balance date and signing of audit report.

3
Q

what is considered to be period 2?

A

period between signing of audit report and issue of financial report.

4
Q

what are the Responsibilities of the Auditor for subsequent events in period 1?

A
responsibility to 
-discover
-evaluate 
all subsequent events
that may have a material effect on the financial statements.
5
Q

list 5 procedures that an auditor may undertake in period 1, to discover/evaluate subsequent events

A

■ Inquire of management
■ Review management procedures to identify
subsequent events.
■ Examine minutes of meetings held after year-end
■ Examine management reports, budgets and
forecasts
■ Inquire of auditee’s lawyers.

6
Q

what are the Responsibilities of the Auditor for subsequent events in period 2?

A

Auditor has responsibility to examine only facts that come to their attention, that, had they been known at the date of the audit report, may have caused
the auditor to amend the audit report. Same for period 3

7
Q

what is the procedure if facts are brought to auditors attention in period 2?

A

■ Discuss with management (or board)
■ Determine if the FR should be amended
■ Inquire how management intends to address the issue

8
Q

If amendments need to be made in period 2, what does the auditor need to do?

A

■ Undertake appropriate audit procedures
■ Extend period 1 procedures
■ Provide a new audit report

9
Q

what can the auditor do if mgmt. refuses to amend report for facts brought to auditors attention in period 2?

A

■ Modify the audit opinion/ Act to prevent reliance on FR

10
Q

how do we determine if the event an adjusting (type 1) or disclosing (type 2) event?

A
  • adjusting (type 1) - if the issues existed at or before balance date but were unknown
  • disclosing (type 2) event - happened after balance date and does not impact financial year being audited.
11
Q

why must an auditor Obtain a Solicitors’ Representation

Letter?

A

Comprehensive, reliable evidence of the

claims by and against the auditee. (i.e. legal matters)

12
Q

why must an auditor Obtain a Management Representation

Letter?

A

■ Confirm oral representations made by
management to the auditor during the audit.
■ Document the continuing appropriateness of
such representations.
■ Reduce misunderstandings
of representations.
■ Acknowledge management’s responsibility
of FR

13
Q

which 5 issues are covered in the Management Representation

Letter?

A
■ Financial Reporting
■ Completeness of Information
■ Recognition, measurement and disclosure
■ Significant risks and uncertainties
■ Subsequent events
14
Q

can a Management

Representation Letter be used as sole audit evidence?

A

No

15
Q

what is the auditors responsibility for Contingent Liabilities? 3

A

■ Verify existing contingent liabilities.
■ Evaluate accounting treatment.
■ Review for unidentified contingent liabilities

16
Q

what is the auditors responsibility for Review for Commitments? 3

A

■ Inquire of management
■ Review correspondence/ contracts
■ Inquire of solicitors

17
Q

what is the auditors responsibility for Confirmation and Evaluation of
Financial Support? 2

A

■ Auditor must confirm existence and legal
enforceability of such an agreement.
■ receive Comfort letters.

18
Q

what must the auditor Communicate to Those Charged with Governance? 8

A

■ Auditor’s responsibilities
■ Scope and timing of the audit
■ Significant findings from the audit
■ Auditor independence (for listed companies)
■Fraud
■Material weaknesses in internal controls
■Going Concern assumption is inappropriate;
■Assessment Key Audit Matters