Exam 17: Completing the Audit

An engagement checklist is prepared to assist the auditor in drawing final conclusions about the adequacy of the audit evidence.

As part of phase IV of the audit, auditors evaluate evidence they obtained during the first three phases of the audit to determine whether they should perform additional procedures for presentation and disclosure- related objectives.

The auditor has a responsibility to review transactions and activities occurring after the balance sheet date to determine whether anything occurred that might affect the valuation or disclosure of the statements being audited. The auditing procedures required to verify these transactions are commonly referred to as the review for:

A management representation letter is a written statement from a non- independent source and therefore:

To ensure that the audit meets the public accounting firm's standard of performance:

The auditor's responsibility for 'reviewing the subsequent events' of a client is normally limited to the period of time:

The auditor needs to perform procedures to satisfy the three categories of audit objectives: transaction- related objectives, balance- related objectives, and - related objectives

Discuss the circumstances in which an auditor would dual- date the audit report.

An important part of evaluating whether the financial statements are fairly stated is summarising the misstatements uncovered in the audit. Whenever the auditor uncovers misstatements that are in themselves material:

Whenever subsequent events are used to evaluate the amounts included in the statements, care must be taken to distinguish between conditions that existed at the balance sheet date and those that come into being after the end of the year. The subsequent information should NOT be incorporated directly into the statements if the conditions causing the change in valuation:

The issuance of debentures by the client subsequent to year- end would require a footnote disclosure in, but no adjustments to, the financial statements under audit.

The following five categories of specific matters that might be included in a management representation letter are consistent with ASA 580:

ASA 240 requires the auditor to communicate all errors, fraud and illegal acts discovered during the audit to the client's audit committee.

The management letter:

One of the auditor's primary concerns related to presentation- and disclosure- related objectives is the assertion.

Auditors do not need to design and perform procedures in every audit to review for contingent liabilities and subsequent events as part of their phase IV testing.

The following events all occurred after the balance sheet date of 30 June 2012, but prior to the date of the audit report, 15 August 2012. Which one would require an adjustment to the account balances as at 30 June 2012?

If, after the accumulation of final evidence and during the evaluation of results, the auditor concludes that sufficient evidence has NOT been obtained to draw a conclusion about fairness of the client's representations, there are two choices:

Often, there is a large number of immaterial errors discovered that do not require an adjustment at the time they are found.

Inquiries of management (orally and in writing) regarding the possibility of unrecorded contingencies will NOT be useful in uncovering: