Explain the audit procedures performed as part of the engagement wrap-up
1. Review planned audit procedures for proper and complete execution
2. All
... [Show More] necessary matters have been appropriately considered
3. Revisit open review notes, "to-do" items and any procedures not yet completed
4. All unnecessary docs removed from audit files
5. Multi-location engagements - all docs required obtained and reviewed
6. Consider amount used for materiality
7. Reconsider assessments of internal controls and risk of fraud
8. Perform analytical procedures, review subsequent events
Why is the engagement wrap-up process important
-ensures auditor considers all matters are relevant to finalizing documentation
Considerations when assessing going concern assumption
-Size and complexity of the entity
-Nature and condition of business
-The degree to which it is effected by external factors
-material uncertainties (ability to pay debt)
Contingent liabilities procedures
1. Inquire of management, in-house legal counsel about unreported liabilities
2. Review minutes of meetings of external legal counsel and BoD, management
3. Review correspondence with tax authorities
4. Review legal expense accounts for unexpected fluctuations
5. Include management representation letter with fact that all liabilities has been disclosed
Subsequent event
both events occurring between year-end and the date of the audit report, and facts discovered after date of audit report
Type 1 Subsequent Event
-Events that provide additional evidence with respect to the conditions that existed on the date of the FS
E.g. Bankruptcy of a customer subsequent to year end, increase in ADFA
Type 2 Subsequent Event
- Events that provide evidence with respects to condition that AROSE subsequent to the date of financial statement
E.g. Factory burnt now, loss of inventory
Components of an Audit Report
1. Title
2. Addresse
3. Introductory paragraph
4. Management's responsibility
5. Auditor's responsibility
6. Auditor's opinion
7. Other reporting responsibilities
8. Auditors signature
9. Date of report
10. Auditor's address
Unmodified Report with Emphasis of Matter is given under these conditions:
-Going Concern
-Litigation
-early adoption of new accounting standard
-major catastrophe that has happened
-subsequent event
Financial Statements are materially misstated but not pervasive
What opinion will be given?
Modified Opinion with qualification
FS are materially misstated and is pervasive
What opinion will be given?
Modified and adverse
Inability to obtain sufficient appropriate audit evidence but not pervasive
Modified and qualification [Show Less]