Professional Documents
Culture Documents
Chapter 18
Completion
and
Communication
1
Objectives
Describe the auditor’s responsibilities with respect to
events occurring after the end of the financial year
Explain the different types of accounting treatments for
events occurring after the end of the financial year
Explain the procedures in ensuring that the going
concern basis is appropriate
Explain the procedures in ensuring that all contingent
liabilities have been properly identified and disclosed
Describe and state the purpose of a management
representation letter
Indicate why analytical procedures are important in
undertaking the overall review of the financial statements
Identify the steps in evaluating audit findings
Indicate the appropriate communication with the entity at
2
the conclusion of the audit
Auditor’s Responsibilities towards completion of audit
3
Auditing procedures
5 5
Auditing procedures
6 6
Audit reporting dates
• Disclosing entity – within 3 months of its balance date.
7
The nature of completion and review procedures
8
Subsequent events
9
Review of subsequent events
The auditor shall consider the effect of subsequent
events on the financial report and on the auditor’s report
(ASA 560.5)
Subsequent events consist of:
– events occurring between the end of the period and
the date of the auditor’s report
– facts discovered after the date of the auditor’s report
The auditor needs to assess whether it is an event on
which he or she has a responsibility to act
If the auditor has the responsibility, there is a need to
consider the appropriate accounting treatment
The following slide shows the timeline in respect of
subsequent events
10 10
Review of subsequent events
11
Subsequent events review
12
Date of the audit report
13
Events between balance date and date of audit
report
14
Types of events subsequent to balance date
15
Adjusting events
16 16
Type 1 or adjusting events
17
Examples of Type 1 (adjusting) events
18
Non-adjusting events
19 19
Type 2 or disclosing events
21
Events subsequent to the date of the audit report
22
Events subsequent to the issue of the financial report
23
Events subsequent to the issue of the financial report
(cont.)
24
Audit procedures after balance date
25
Performing analytical procedures
26 26
Performing analytical procedures
Reasons for using analytical review in the overall review is
to:
– corroborate conclusions formed during the audit on
individual elements of financial information
– assist in arriving at the overall conclusion that the
financial information as a whole, is consistent with the
knowledge of the entity’s business
– gain assurance that the company will remain a going
concern for the relevant period
The procedures should be:
– applied to critical audit areas identified during the audit
– based on financial statement data after all audit
adjustments and reclassifications have been recognised
27 27
Analytical procedures at or near completion
28
Audit procedures near to date of audit report
29
Representation letters
30
Communication with the entity’s legal
representative
31 31
Solicitors’ representation letter
32
Management representation letter
33
Management representation letter
34 34
Reliability of management
representation letter
35
Review of working papers and financial report
36
Review of the financial report
• In considering presentations and disclosures for each
account balance and related note disclosures, the
auditor must gather evidence to support the following
assertions:
37
Review of the financial report (cont.)
39
Appropriateness of the going concern basis
40
Assessing going concern at completion stage
41
Considering the appropriateness of
the going concern assumption
42 42
Review for contingent liabilities
43 43
Audit procedures to ascertain the
existence of contingent liabilities
45
Evaluating the findings
At this stage, the auditor’s objectives are:
– to ensure that the audit process has complied with
auditing standards
– to determine the type of audit opinion to
be expressed
To meet these objectives the auditor:
– makes the final assessment of materiality and audit
risk
– undertakes the technical review of the financial
statements
– undertakes the final review of the working papers
– formulates an opinion and drafts the auditor’s report
46 46
Communicating with the entity
47 47
Communication of audit matters
49 49