24-28. completing the audit and postaudit responsibilities - 23 may - 30 may tutoriaaaallllll

8/20/2019 24-28. Completing the Audit and Postaudit Responsibilities - 23 MAY - 30 MAY TUTORIAAAALLLLLL

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Modern Auditing:Modern Auditing: Assurance Services and the Integrity Assurance Services and the Integrity

of Financial Reporting, 8of Financial Reporting, 8thth EditionEdition

William C. Boynton William C. BoyntonCalifornia Polytechnic StateCalifornia Polytechnic StateUniversity at San Luis ObispoUniversity at San Luis Obispo

Raymond N. JohnsonRaymond N. JohnsonPortland State UniversityPortland State University

Chapter 19 – Completing the Audit and PostauditResponsibilities


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Chapter OverviewChapter Overview


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Completing the AuditCompleting the Audit

•Do not pertain to specific transactioncycles or accounts

•Performed after the balance sheet date

•Involve many subjective judgments

•Usually performed by audit managers orother senior members of the audit team


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Completing the FieldworkCompleting the Fieldwork

•Making Subsequent Events Review

– Types of Events

• Type 1 subsequent events

• Type 2 subsequent events

– Auditing Procedures in the SubsequentPeriod

–

Effects on Auditor’s Report


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Subsequent EventsSubsequent Events


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Completing the FieldworkCompleting the Fieldwork

•Obtaining Client RepresentationLetter

–Content of Representation Letter

–Effects on the Auditor’s Report

•Performing Analytical Procedures

–Overall Review


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Evaluating the FindingsEvaluating the Findings

•Making Final Assessment of Materiality and Audit Risk

–Known Misstatements

–Projected Uncorrected Misstatements (Sampling Techniques)

–Estimated Uncorrected Misstatements

(Analytical Procedures)

–Likely Misstatement

–

Aggregate Likely Misstatement


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•Evaluating Going Concern

–Substantial Doubt Exists

•Obtain information of management’s plans

• Assess likelihood of effectiveimplementation

–

Substantial Doubts Persists•Consider adequacy of disclosure

•Include explanatory paragraph


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•Making Technical Review ofFinancial Statements

–Financial Statement Checklist

•

Formulating Opinion and Drafting Audit Report on FinancialStatements


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•Formulating Opinion and Drafting AuditReport on Internal Controls OverFinancial Reporting –

Opinion about fairness of management’sassertion on internal controls

–Opinion about adequacy of internal controls

•

Making Final Reviews of Working Papers –First-level

–Manager

–Partner

–

Cold Review


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Study BreakStudy Break

1.These types of events provide evidence with respect to conditions that did notexist at the date of the balance sheet

but arose subsequent to that date. A.Type 1 subsequent events

B.Type 2 subsequent events

C.Overall review

D.Balance sheet date

B. Type 2 subsequent events


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2.This item is obtained to complementother audit procedures, includingconfirmation of oral representations

given to the auditor by management. A.Client representation letter

B.Letter of audit inquiry

C.Final review

D.Auditor’s report

A. Client representation letter


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3. The total of uncorrectedmisstatements, projected uncorrectedmisstatements, and estimated

misstatements for an account is called______.

A.Known misstatement

B.Likely misstatement

C.Aggregate likely misstatement

D.Tolerable misstatement

B. Likely misstatement


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Communicating with the ClientCommunicating with the Client

•Communicating Internal ControlMatters

–Significant Deficiency

–Material Weakness


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•Communicating Matters Pertaining toConduct of Audit

– Auditor’s responsibility under GAAS

–Significant accounting policies

– Auditor’s judgment about the quality of theentity’s accounting principles

–Management judgments and accounting

estimates


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•Communicating Matters Pertaining toConduct of Audit –Significant audit adjustments

–Disagreements with management

–Consultation with other accountants

–Major issues discusses with management priorto retention

–Difficulties encountered in performing the audit


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•Preparing Management Letter

–Internal Control Matters

–Recommendations regarding themanagement of resources

– Tax-related Matters


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Summary of Completing theSummary of Completing the Audit Audit


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Postaudit ResponsibilitiesPostaudit Responsibilities

•Subsequent Events Between ReportDate and Issuance of Report

•Discovery of Facts Existing at ReportDate

•

Discovery of Omitted Procedures


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4. This is an internal control deficiencythat adversely affects the company’sability to initiate, record, process or

report external financial data reliably inaccordance with GAAP.

A.Material weakness

B.Corroboration

C.MisappropriationD.Significant deficiency

D. Significant deficiency


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5.The management letter mayinclude all of the following items,except:

A.Internal control matters

B.Management recommendations

C.Tax-related matters

D.All of the above

D. All of the above

24-28. completing the audit and postaudit responsibilities - 23 may - 30 may tutoriaaaallllll

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